BIR eyes QR code tracker to spot illicit cigarettes

MANILA, Philippines — The Bureau of Internal Revenue (BIR) will establish a digital track and trace system that even the public can use to spot whether a certain cigarette product is illicit or not.

In a forum organized by the Sin Tax Coalition on Tuesday, BIR commissioner Romeo Lumagui said the revenue agency is moving to upgrade the security features of the Internal Revenue Stamp Integrated System (IRSIS).

At present, the BIR uses stamps on cigarettes that would determine whether excise taxes have been paid. The bureau has its own unique device that monitors the commodity.

“We are shifting to a digital track and trace solution. We will be able to monitor everything and all the details, not just if excise tax has been paid,” Lumagui said.

“We will not need a special gadget to report. Even through ordinary cell phones, you can see the details then it will go to the system that we can also monitor,” he said.

The government has been losing billions in taxes from illicit cigarette trade as enforcement remains weak even as the entry of the contraband commodity has been worsening over the years.

Lumagui emphasized that the BIR is facing challenges in the enforcement front amid limited gadgets to check the validity of the stamps, as well as the lack of manpower.

Likewise, the digital track and trace system will address the issue of certain manufacturers pretending to be exporters just so they can escape tax liabilities.

“The first thing that it will be able to address is monitoring. Those manufacturers pretending to be exporters would think that their products can be traced already,” Lumagui said.

As of now, the BIR is starting with the procurement process and discussion with possible suppliers.

“We are formalizing the procedure soon because our target is to fully implement this by January 2025,” Lumagui said.

A recent study by the University of Asia and the Pacific and the Federation of Philippine Industries Inc. showed that illicit trade in cigarettes has reduced the country’s gross domestic product by an average of 0.39 percent over the past five years.

It also showed that the government stands to lose approximately P30.57 billion in revenues this year, almost 20 percent higher than the 2022 foregone taxes of P26.19 billion.

Lost taxes will further increase to P33.7 billion next year and jump to P36.8 billion by 2025. The value is expected to rise to P39.8 billion by 2026 and balloon to P42.54 billion in 2027.