BIR: Law needed to ban 'below-cost' cigarettes

Posted at 06/23/14 3:47 PM

MANILA, Philippines (UPDATE) – Bureau of Internal Revenue (BIR) Commissioner Kim Henares said she can't stop cigarette manufacturers from selling below cost unless Congress passes a law against it.

"Today, the BIR has no power to stop any business enterprise to sell at a loss if this is part of their marketing strategies. There should be a law that will be prohibiting companies, like cigarette firms, to sell at a loss,” Henares said.

Henares was reacting to calls from Philip Morris Fortune Tobacco Corp. (PMFTC) to stop its rival, Bulacan-based Mighty Corp., from selling cigarettes at what PMFTC said are below-cost prices.

PMFTC alleged that Mighty is able to do this because it is smuggling in tobacco and evading taxes by underdeclaring production and sales.

Henares said this would be better than revising the sin tax law that was revised last year and could also boost her collections.

“If there's something you should lobby for, I think you should lobby for a law which will require a minimum floor price [on cigarettes] and not to touch the [current] tax anymore. We should lobby for a law that cigarette in the Philippines should not be sold at below [certain] price,” she said.

PMFTC, a joint venture between Fortune Tobacco Corporation and Philip Morris Philippines Manufacturing Inc., is the tobacco arm of Lucio Tan's LT Group.