There is an ongoing case before the Court of Tax Appeals (CTA) regarding the seizure of 238,300 cigarette packs carrying the brands Two Moon and SOHO and allegedly bearing no tax stamps to prove excise tax payment, which is in violation of Republic Act 10351 and Bureau of Internal Revenue (BIR) Revenue Regulations 7-2014 and 9-2015.
A report published by the BusinessMirror said the manufacturer of the confiscated cigarettes GB-BEM and its affiliate GB Global claimed the seized cigarettes were for exports, although authorities noted that the packs did not bear the required destination country, the name and address of the manufacturer, and the BIR assessment number of the manufacturer and exporter.
Because of such violations, the BIR also ordered the seizure of three cigarette-making lines and two cigarette-packing lines of GB GLOBAL, which, according to news reports, listed the names of Greg Lim and Benson Chua as the biggest shareholders and directors in the Securities and Exchange Commission filings.
The CTA, on October 27, 2020, granted GB’s request for an injunction and ordered the return of all those seized in the raid, including suspected fake cigarettes supposedly for export. This is now being challenged by the BIR.
In my radio program with former Senate President Juan Ponce Enrile dubbed “Dito sa Bayan ni Juan” aired over DZAR every Saturday, we’ve been getting a lot of queries and concerns from our listeners about this issue involving GB Global and the BIR.
Some listeners ask obvious questions, like: Are these SOHO and Two Moon-branded cigarettes really for the export market? If, for instance, the intention of GB Global is to export the Two Moon-branded cigarettes to Thailand, how come there are packs that do not comply with the Thai Plain Packaging law? Why is it also that the characters printed on these Two Moon packs have no relevant meaning in Thai?
Concerns related to smuggling were also raised, like: If the cigarettes being manufactured by GB Global would suddenly end up in the Philippine market, isn’t this a form of smuggling also? This was asked after it was reported that Two Moon cigarettes with Thai Graphic Health Warning were being sold in Nueva Ecija, Bataan, and Zambales.
Some queries relate to fiscal matters, like: If your productions are for export, you don’t need to locate inside a special economic zone to get VAT and excise tax exemptions. So why does GB Global need to set up operations at Angeles Industrial Park in Pampanga? Are there Bureau of Customs personnel guarding the gates of the Angeles Industrial Park to make sure the SOHO and Two Moon cigarettes will not be sold locally?
I’m sure these questions and concerns will be ventilated in the CTA hearings. In the meantime, should you find Two Moon and SOHO cigarettes being sold locally, report to authorities immediately so you can help President Duterte in his campaign against smuggling and tax cheats.
Dr. Jesus Lim Arranza is the chairman of the Federation of Philippine Industries and Fight Illicit Trade; a broad-based, multisectoral movement intended to protect consumers, safeguard government revenues and shield legitimate industries from the ill effects of smuggling.