Senate panel on ways and means’ findings on illicit trade

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Stronger enforcement, LGUs to curb tobacco smuggling – Senate panel

By: - Reporter /
12:10 PM May 19, 2025

An international company executive on Thursday pointed out that up to 73 percent of the Philippines’ tobacco consumption in the Philippines are smuggled. 

(REUTERS/Illustration)

MANILA, Philippines — Incentives for law enforcement agencies, mobilizing local government units and pursuing legal actions, and not tax reduction, will help address the smuggling of  tobacco products,   Senate panel on ways and means chairman Sherwin Gatchalian said on Monday. 

“Our findings during the three hearings are that the solution to curb illicit trade will not come from reduction of taxes, that is our finding. It will come from strengthening our enforcement, it will come from giving incentives to our enforcement agencies and also mobilizing our [local government units or LGUs] — as well as of course winning the cases,” said Gatchalian during the panel’s hearing.

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“Without winning the cases, nothing’s gonna happen,” he added.

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Gatchalian lamented the poor progression of cases in the country related to illicit trade. 

Data presented during the hearing showed that the Bureau of Customs – from 2018 to 2025 – conducted 1,296 operations.

Sixty-four cases were filed, with 14 pending before the office of the prosecutor, eight were filed before courts while only 2 have been decided by courts. 

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The Bureau of Internal Revenue, meanwhile, conducted 1,636 operations from 2023 to 2025.

One hundred ninety-four cases were filed, with 15 pending before the office of the prosecutor, 14 filed before courts; while only 1 has been decided by the court.

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“In other words, the enforcement agencies are apprehending, they are doing their intelligence work but in terms of prosecution and actually winning the cases, we’re very far off from winning cases. So in other words, there is no certainty of prosecution. If there is no certainty of prosecution, people will not be afraid of getting penalized or being imposed,” Gatchalian pointed out.  

Below is the complete list of the panel’s proposed resolutions to curb illicit trade: 

  • Include LGUs interagency collaboration. The LGUs must also be allowed or deputized to crack down against illicit trade of excisable products. 
  • Introduce special appropriation for LGUs, BIR, BOC, Philippine National Police for enforcement rewards
  • Introduce penalties specific to manufacturers, distributors, and retailers on unlawful possession or removal from place of production of tobacco and vapor products
  • Impose a single-tax rate on all vapor products
  • Impose an ad valorem tax on vaping device
  • Mobilize the Anti-Money Laundering Council to enforce the Anti-Money Laundering Law
  • Designate the unlawful possession or removal from place of production of tobacco and vapor products as a predicate offense under the Anti-Money Laundering Law
  • Increase intelligence coordination
  • Enforce intercountry cooperation and coordination
  • Use technology for track and race
  • Increase efforts to run after retailers
  • Strengthen enforcement against e-marketplaces and e-retailers through issuance of compliance orders, takedown orders, and blacklisting
  • Improve prosecution and conviction by the BOC and BIR 
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