The Bureau of Internal Revenue (BIR) has padlocked earlier this year a warehouse illegally manufacturing tobacco products inside the Clark Special Economic Zone in Pampanga where 1.65 million packs of cigarettes supposedly intended for export to Malaysia were seized by its strike team.
In a report to Finance Secretary Carlos Dominguez III, the BIR said the warehouse of GB-BEM Cigarette Co. Inc operating as a cigarette factory inside Clark was closed last February 5 because of its failure to secure a Permit To Operate as required to manufacture cigarettes.
“The company claims that it has a tolling agreement with a Malaysian-based client and that the cigarettes are 100 percent exported. However, the finished products did not bear any markings that they were for export and that these were manufactured in the Philippines,” BIR Deputy Commissioner Arnel Guballa said during a Department of Finance (DOF) Executive Committee (Execom) meeting held before the implementation of the Luzon-wide Enhanced Community Quarantine (ECQ).
Guballa said a total of 1,656,888 packs of cigarettes were seized from the warehouse of GB-BEM.
BIR has monitored the establishment since last year following reports it has received that the cigarettes made in GB’s factory bear tax stamps similar to those issued by the Malaysian government, Guballa said.
Guballa said the BIR has also confirmed that tobacco products made by GB are loaded into containers and received by Malaysian clients, but without the proper tax markings.
Dominguez had instructed both the BIR and the Bureau of Customs (BOC) to coordinate with Malaysian officials and raise this concern before them.
Dominguez has instructed the BIR and BOC to step up their campaign against the illicit tobacco trade as the increase in the excise tax rates of tobacco products has incentivized illegal traders to increasingly resort to smuggling and tax evasion.