The Bureau of Internal Revenue (BIR) is rolling out a new digital track-and-trace system, utilizing quick-response (QR) codes readable by any smartphone, to allow both consumers and regulators to verify the authenticity of vape products and other excisable goods. This initiative forms a core part of the agency’s intensified efforts to curb the burgeoning illicit trade of smuggled and unregulated vape products, which not only evade taxes but also pose significant public health risks.

BIR Commissioner Romeo Lumagui Jr., who announced the development during a recent Kapihan sa Manila Bay forum, emphasized that the new system is designed to support both government enforcement efforts and legitimate businesses.He noted that even compliant business owners sometimes unknowingly acquire counterfeit products with fake tax stamps from wholesalers.

Lumagui warned that illegal vape operations are causing the government to lose “billions of pesos” in revenue.Enforcement has become particularly challenging due to sophisticated tactics employed by retailers to hide unregistered products from inspectors, including “secret menus” and stashing illicit items in drawers and stockrooms. The Commissioner acknowledged that the rapid shift from traditional cigarettes to vape products, especially among the youth, further complicates enforcement.

He highlighted that the vape industry is relatively new, with minimal tax collection on vape products from 2022 onwards, partly because many retailers are unaware that these products are subject to excise tax. Lumagui expressed confidence that by effectively addressing the illegal vape market, the government could significantly recover lost revenues and meet its collection targets.

In response, the BIR is not only stepping up its on-the-ground operations, which included visiting thousands of shops nationwide last May, but also actively encouraging citizen participation. The agency is opening new reporting channels and offering incentives under its existing reward system for those who report illicit trade activities.

“There will be no letup. There will be continuous operations,” Lumagui stated, appealing to businesses to comply. “We encourage everyone to just comply because if you comply, you are helping the country and you could do business in peace.” He also noted a new challenge where some illicit traders are now using residential areas as distribution points to avoid detection.