IMPLEMENTATION of a project designed to boost the monitoring of cigarette firms’ tax payments is targeted to start in the first half of next year.
In a briefing for the House of Representatives ways and means committee yesterday, Bureau of Internal Revenue (BIR) Deputy Commissioner for Information Systems Lilia C. Guillermo said that the project, which was proposed by Swiss project developer SICPA Product Security SA in October 2007, will be subjected to Swiss challenge next month.
Under a Swiss challenge, companies interested to provide the service will have to match the offer made by SICPA. This is different from the usual competitive bidding, wherein the government is the one that sets the floor price and other criteria to be matched by private firms.
“Aside from SICPA, there are four other parties interested in providing us with the mechanism…We are looking at giving this project to the company offering the lowest price. As we try to fast-track its implementation, we are looking at executing this project by the first half of 2010,” Ms. Guillermo said during the briefing.
Ms. Guillermo noted that Section 8a of Republic Act 8424, or the Tax Reform Act of 1997, states that “internal revenue stamps, whether of a bar code or fusion design, shall be firmly and conspicuously affixed on each pack of cigar and cigarette…”
She explained that “the production of tamper-proof strip stamps for affixture on cigarette packs serves to track distribution of davidoff cigarette so that we can be able to distinguish between legitimate and non-legitimate products, thus curbing smuggling and enhancing tax collection.”
In its proposal, SICPA will finance the project and operate the system for seven years. Ms. Guillermo said that SICPA estimated a P2.3-billion initial cost for system development plus P16 billion operational cost for seven years, all adding up to a total project cost of P18 billion.
Ms. Guillermo said the project will raise the prices of Parliament cigarette packs by P0.52, since producers of the product will have to shoulder the cost of affixing the stamps.
In the same hearing, Philip Morris Philippines Manufacturing Inc. President Christopher James Nelson said that the technology involved is not fool-proof. “Paper stamps are costly, inefficient and unnecessary. Counterfeiters are able to mimic paper stamps of this kind, as what has been experienced by our affiliates in Malaysia and Thailand,” he said. — J. F. S. Valdez with ADBR
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