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DSI targets tobacco giant in tax evasion row

The Department of Special Investigation has decided to file charges against US tobacco firm Philip Morris Thailand for allegedly under-declaring the value of its products to evade taxes.

The DSI’s move contradicts a decision by public prosecutors, who decided in January to drop charges against the firm, 13 other companies and Philip Morris Thailand executive Charonchai Salyapong.

DSI chief Tharit Pengdit yesterday said the agency would refer its decision to the attorney-general as required by law.

If the DSI and the public prosecutors have differing opinions, the attorney-general will have the final say on whether to try the case. If the attorney-general disagrees with the DSI, the case will be dropped.

The DSI probe was launched when the Excise Department filed a complaint against Philip Morris Thailand accusing the firm of under-declaring the value of Marlboro and L&M cigarettes imported into Thailand, resulting in a tax loss of nearly 69 billion baht.

Mr Tharit said yesterday the evidence was strong enough to charge the tobacco company with falsely stating the value of its imports, resulting in financial damage to Thailand.

He noted the value of imports declared by the tobacco company has not changed since 2003 despite foreign exchange rate volatility and rising costs.

He insisted the DSI had not decided to pursue the case to appease the Pheu Thai Party which grilled the Democrats about the matter during an earlier censure debate.

Then the opposition in the House of Representatives, Pheu Thai MPs accused former prime minister Abhisit Vejjajiva of interfering in the justice system and allowing Philip Morris (Thailand) to falsely report the value of its cigarette imports.

“The DSI’s stance has nothing to do with the change in the government,” said Mr Tharit. “If the DSI just wanted to appease those in power, it could simply have agreed with the prosecution months ago. We’re doing our job.”

Philip Morris Thailand said yesterday it was disappointed with the DSI’s decision.

The company said its practices had been confirmed by a World Trade Organization panel which ruled that the declared customs values were consistent with Thai law.

“Based on the public prosecutor’s opinion and the decision of a World Trade Organization panel, we believe that the attorney-general will be able to approve the public prosecutor’s non-prosecution order,” it said.

It also said that the dispute called for a “broader reform” of the cigarette taxation system from the current regime which uses import values to determine taxes to one that uses the retail prices as the basis for excise tax calculations.

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