PMFTC may halt exports to markets not requiring stamp tax

MANILA, Philippines - Leading cigarette maker Phillip Morris Fortune Tobacco Corp. (PMFTC) will likely put a halt to exports of its products to countries where excise stamps are not required.

PMFTC president Paul Riley said the company would have a problem exporting to Korea, Thailand and Pakistan whose governments do not require the affixture of excise tax stamps on their products.

An excise stamp is a type of revenue stamp affixed to excisable goods to indicate that the required excise tax has been paid by the manufacturer.

“One of the problems now with the exports is that when you export to a country that does not have tax stamps, you have to apply the Philippine tax stamp and that’s going to be problematic…We export to Korea, Pakistan – these exports will have to stop because we’ll put the Philippine tax stamp with a health warning and they’re not going to accept that,” Riley said.

“So we have to stop producing for the export market… hopefully conditions change later,” he added.

Riley, however, pointed out that exports to these countries are miniscule, accounting for only one percent of the total exports.

He said the company’s goal is to make sure every cigarette company pays the right taxes.

PMFTC has openly accused Bulacan-based Mighty Corp. of underdeclaring sales volume to avoid paying higher taxes to the government, resulting in the decline of total tax-paid industry cigarette volumes.

Estimated total tax-paid industry cigarette volumes fell 3.2 percent to 22 billion units in the third quarter. On a year-to-date basis, it dipped by 0.8 percent.

PMFTC claimed that the undervaluation has allowed Mighty to sell cigarettes at very low prices as well as enlarge its market share to 20 percent from seven percent a year ago.

A significant hike in excise taxes prompted PMFTC to raise the prices of its cigarette brands. As a result,  PMFTC recorded a sharp fall in cigarette shipments to the Philippine market as price-conscious individuals shifted to cheaper brands to satisfy their nicotine craving.