BIR has until Dec 26 to conclude discussions with Sicpa

MANILA, Philippines - The Bureau of Internal Revenue (BIR) has just until Dec. 26 to conclude discussions with Switzerland-based Sicpa Product Security SA for the firm’s unsolicited proposal to provide tamper proof security stamps on cigarettes and alcohol products in the Philippines, an agency official said.

BIR Deputy Commissioner Lilia Guillermo, in a recent briefing with lawmakers on the Sicpa project, said that under the Build-Operate-Transfer Law or RA 7718, a government agency that receives an unsolicited proposal from the private sector has until 60 days to negotiate the project. The BIR started negotiations with Sicpa last Oct. 26.  

This means that the two parties have to thresh out all the thorny issues regarding the project by Dec. 26. One major issue is the project cost which cigarette firms refuse to shoulder. They said they would have to pass on the additional cost to consumers.

Once the two parties finalize the negotiations, the BIR would have to subject Sicpa’s unsolicited proposal to a Swiss challenge in 2010, said Guillermo, who heads the team negotiating with Sicpa.

However, as the original proponent, Sicpa is entitled to challenge incoming proposals. Cigarette manufacturer Philip Morris has expressed interest in providing a similar service, said Guillermo.

Sicpa, she also said, is determined to bag the multi-billion contract for the stamp-tax projected intended to curb smuggling of cigarette and alcohol products.

At this stage of negotiations, the BIR is in talks with Sicpa to lower the project cost so that it would translate to a 20-centavo to 30-centavo additional increase per pack in the price of cigarettes from the initial estimate of 50-centavo increase in cigarette prices.

Guillermo said a 20-centavo increase is feasible. Lawmakers have questioned the SICPA project but Finance Secretary Margarito Teves has assured that there is nothing final in the ongoing negotiations of the BIR with the Swiss firm, stressing that a “process” has to be observed.

He earlier said even if the BIR wraps up its negotiations with SICPA for the latter’s stamp-tax technology project, the proposal would still be sent back to the National Economic and for board approval and subsequently be subjected to a Swiss Challenge.