Philip Morris pursues Thailand tax claims

The Philippines may file a trade complaint against Thailand for refusing to implement a World Trade Organization ruling on a case filed and won by Philip Morris International Fortune Tobacco Corp. in 2011.

WTO panelist and chief executive of T/A Trade Advisory Center Inc. Anthony Abad said the Philippines can complain on Thailand’s inaction about the WTO decision instructing Thailand to create reforms on its customs valuations and taxes. T/A Trade is the local counsel of Philip Morris in the Philippines.

“The Philippines has not acted on the implementation case yet. If [it] feels within a reasonable period that the decision is not yet implemented, the member can file an implementation case at the WTO,” he said.

He said the Philippines could tap diplomatic channels to help Philip Morris follow up on its tax claims with the Thailand customs and valuation agency.

The Trade Department, meanwhile, is giving Thailand time to implement the WTO ruling.

The WTO ruled in favor of the Philippines on a cigarette excise tax case filed in Thailand.

Abad said the hesitation for filing an implementation case might stem from Bangkok’s reluctance to foot the bill.

“The Philippine government can initiate on its own but usually driven by the private sector. The case was a Customs case filed by Thailand against Philip Morris, which is a case of discriminatory excise tax,” said Abad.

The WTO said the excise tax imposed in imported cigarettes should have similar rates imposed in Thailand.

The Dispute Settlement Body of the WTO ruled with finality in 2011 that Thailand unfairly treated cigarette imports from the Philippines between August 2006 and September 2007.

The Philippines filed a complaint with the WTO on behalf of Philip Morris Philippines in 2008 after the Thai government unfairly treated imported cigarette brands, especially in terms of the customs valuation practices, excise tax, health tax, TV tax, value-added tax regime, retail licensing requirements and import guarantees imposed on cigarette importers.

A Philippine official said the action of Thailand to indict Philip Morris officials may not conform with nor it was an implementation of the WTO decision compensating Philip Morris Philippines.

He said while Thailand might have complied with recommendations of the DSB, a criminal case invoking entries of cigarette imports covered by the WTO ruling would in effect negate the recommendations of the world body.

He said all member-states must adhere to the WTO rules, citing that Thailand so far complied with nine out of the 10 recommendations set by the WTO ruling in favor of cigarette imports from the Philippines.

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