Of mobile apps and cigarette stamps

It really is the age of technology.

Almost everything we need is available at the slight touch of a finger or a click of a button. Almost every information is available by typing into a tiny search box and pressing “enter.” The world is much more accessible and searchable now than ever before. People have so much power in their hands. Quite literally, I must say. Holding a smart phone in one hand and a computer in the other, some say that you can go places without actually leaving your seat.

Lunch conversations consists mostly of what’s trending on social media or the latest applications (apps). Our everyday activity is covered by apps to try and make things more convenient for us. Do you need a ride to get you some place you need to be? There’s an app for that. Do you need directions going from one place to another? There’s an app for that. Do you need to know which exercise is best for you? Yes, you got it right, there’s an app for that, as well.

We live in a world where Internet plays a big role in our everyday lives. It might be safe to say that apps, in general, make life easier for us.

Speaking of apps, last April 12, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMO) No. 51-2016 informing the public of the availability of the mobile app to authenticate internal revenue stamps of cigarettes. It’s called the Stamp Verifier App.

You might be wondering about two things right now. One, that there are internal revenue stamps on cigarettes. And two, that there’s a mobile app to authenticate that. Allow me to enlighten your wondering minds.

Dating back to 1997, the BIR already prescribed, under Revenue Regulation (RR) No. 01-97, the affixture of internal revenue stamps, whether of a bar code design on each pack or a fuson stamp heat fused on each pack of cigar. This requirement was reiterated by Congress, under Republic Act (RA) No. 10351, commonly referred to as the Sin Tax Law, when it mandated the commissioner of the Internal Revenue to “prescribe, provide and distribute to the proper officials xxx internal revenue stamps; unique, secure and non-removable markings, such as codes or stamps, be affixed to or form part of all unit packets and packages and any outside packaging of cigarettes xxx.”

To implement this mandate of the law, the BIR issued RR No. 7-2014, as amended, which prescribes the affixture of internal revenue stamps (IRS) on imported and locally manufactured cigarettes and the use of the Internal Revenue Stamps Integrated System (IRSIS) for the ordering, distribution and monitoring thereof.

An internal revenue stamp refers to a BIR issued stamp which contains multi-layered security features, an IRSIS assigned unique identifier code and quick reference code which contains information pertinent only to the cigarette pack to which it is affixed. These stamps may be ordered by the importer or local manufacturer of cigarettes through the stamp ordering module of the IRSIS. But do note that, before the BIR approves such order, the excise tax due to the number of IRS ordered must first be paid. The BIR wants you to pay first your tax liabilities before it approves your request for stamps.

Now here is where the Stamp Verifier App plays a part. The mobile app helps consumers determine whether the IRS on their pack of locally manufactured cigarette, as well as imported ones, is authentic or not. This helps consumers know for themselves, with a touch on their smart phone and a little bit of scanning, whether they are holding smuggled or counterfeit cigarettes. It is empowering to know that we, the people, armed with nothing but a smart phone and a downloaded app, may know whether what we are holding in our hands are smuggled or counterfeit cigarettes.

Now what will happen if upon scanning the internal revenue stamp using the Stamp Verifier App, the stamp happens to be invalid? According to RMC No. 51-2016, an invalid QR code means that the unique identifier code attached to the cigarette pack is neither in the database of the unique identifier codes nor does it match the corresponding data elements. This leads to the conclusion that the cigarettes are either smuggled or counterfeit cigarettes. I think this serves a deterrent to local manufacturers and importers of cigarettes to think twice before smuggling or counterfeiting or evading their tax liabilities because any person in possession of a smart phone and the app can check at any time and at random of their cigarette product is a counterfeit or is smuggled.

Not only that, the information retrieved thru scanning is automatically uploaded to the IRSIS Mobile App Web Service for monitoring and evaluation. Based on this evaluation, the BIR shall institute actions on persons responsible for the manufacture/sale of the cigarette packs. Now if that doesn’t make you think twice of the counterfeiting or smuggling cigarettes, I don’t know what will.

Like I said earlier, in general, apps make life easier for us. It seems the BIR likewise found a way to make enforcement of tax laws easier by empowering the people to participate in the process. This, I must say is putting the power in the hands, quite literally, of the people.

The Stamp Verifier App is available on Google Play Store for Android users and the App Store for iOS users.

?Iris Fatima Villarin Cero is a supervisor from the tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice, Tier 1 transfer pricing practice and Tier 1 leading tax transactional firm in the Philippines by the International Tax Review.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email [email protected] or [email protected].