Business groups back 3rd-party audit of cigarette firms' taxes

Posted at 07/22/14 3:29 PM

MANILA, Philippines - More business groups have joined calls for third-party auditing of tax compliance by cigarette manufacturers, a proposal the Bureau of Internal Revenue has already said would be illegal.

The proposal was earlier made by Philip Morris Fortune Tobacco, which accuses its rival Mighty Corp. of evading taxes and smuggling; and the Philippine Chamber of Commerce and Industry.

The Federation of Filipino Chinese Chambers of Commerce and Industry, American Chamber of Commerce, Federation of Philippine Industries, and Japanese Chamber of Commerce and Industry of Philippines have sent a joint letter to Finance Secretary Cesar Purisima expressing concern about alleged smuggling and tax evasion by some tobacco companies.

"This issue is of such enormity because it not only places investor companies at a disadvantage when competitors do not pay the correct taxes," they said in the letter.

The business groups also cited the estimated P15 billion in foregone revenues due to the trade of illicit cigarettes in 2013.

"The undersigned business associations would like to add our voice to calls for increased monitoring of manufacturing, importing, warehousing and other facilities of all registered tobacco companies... Given the high demands on the public sector today, we humbly suggest that this could be achieved via a third party monitoring group, working closely with the DOF and its officers," the groups said.

BIR Commissioner Kim Henares earlier said it is illegal for the government to assign audits to third parties. She is now rolling out a stamp tax system that even PMFTC says may help curb tax evasion. - With ANC