Tobacco companies have paid taxes in advance for the production of an additional 27.4 million packs of cigarettes for the 2014-15 fiscal year, according to the Internal Revenue Deparment (IRD).
The total declared amount of cigarette packs to be produced in the current fiscal year now stands at 461.8 million packs, up 27 percent compared to 2013-14FY.
The IRD collected K30.96 billion ($31.91 million) in taxes for the 362.5 million packs produced in 2013-14FY.
Four cigarette factories were inspected in June at the instruction of the Tax Regulation Board to confirm the number of tax stamps bought matched the actual number of packs being produced. The inspections found the factories to be in compliance, officials said.
Cigarette companies operating in Myanmar have been increasingly bold in their marketing campaigns, activists and regulating officials said.
The 2006 Cigarettes and Tobacco Products Law had helped reduce intense marketing of products in the years following its enactment. However, since 2010 marketing campaigns have rebounded and an increasing number of new cigarette brands are entering the market.
Marketing campaigns are more visible in rural areas, with sale booths and advertisements materials being set up at traditional ethnic festivals, activists said.
“No one has been penalised in accordance with the cigarette and tobacco law. This demonstrates the government’s failure to enforce the law to its full extent,” said Dr Nyo Nyo Thin, a member of the parliament.
Major international cigarette companies have expanded into Myanmar due to the country’s low tax rate and also relatively weak legislation on tobacco products compared with neighbouring countries, said U Ye Tun, another member of the parliament. Myanmar currently imposes 50 percent tax on tobacco products.
Cigarette and cheroot has been widely produced in Myanmar for a long time, and being a labour-intensive industry it has been difficult to uproot, industry insiders say.
The practice of prepaying for tax stamps is not uncommon among cigarette companies in Myanmar. Rothman of Pall Mall Myanmar Pte Ltd, the producer of the locally popular cigarette brand Red Ruby, produced 329 million cigarette packs last year and paid K300.6 billion ($300 million) in commercial and income taxes.
In this fiscal year, the company has ordered 344 million tax stamps and has paid K31.03 billion ($31 million) for tax stamps, according to the IRD.
Myanmar-Japan Tobacco Co Ltd that produces Mild Seven cigarette brand in Myanmar has paid in advance taxes of K262.5 million for 2014-15FY, while British American Tobacco Myanmar that produces London and Lucky Strike brands has ordered 9.8 million tax stamps and paid K4.55 billion ($4.6 million) in advance.
