Philip Morris Thailand says will fight 'meritless' Customs charges

The charges brought against Philip Morris Thailand Limited (PMTL) by the Public Prosecutor regarding Customs charges are meritless, unjust and in violation of Thailand’s obligations to comply with the WTO Customs Valuation Agreement, the cigarette maker said in an e-mailed statement on Wednesday.

The charges result from a Department of Special Investigations (“DSI”) investigation that began almost 10 years ago, and allege that PMTL under-declared import prices for cigarettes it imported from the Philippines between 2003 and 2007.

“PMTL has done nothing wrong. Not only are these charges wholly without merit and in violation of Thailand’s obligations to comply with the WTO Customs Valuation Agreement, they also call into question Thailand’s commitment to fairness, transparency and the rule of law," Troy Modlin, branch manager of PMTL, said.

"Prosecuting this case will also undermine Thailand’s stated desire to revitalize its reputation in the international community as a market-based open economy that is investor friendly,” he added.

The decision of the former Attorney General, Mr. Julasingh Vasantasing, to charge PMTL and its current and former employees contradicts the non-prosecution order his own office made more than four years ago, as well as prior rulings of the Thai Customs Department, the Customs Board of Appeal, the Customs Post-Clearance Audit Bureau and the WTO, according to PMTL.

"PMTL has cooperated fully with all involved government agencies since the DSI launched its investigation in 2006. The company intends to vigorously defend itself against these meritless charges and demonstrate that it is in full compliance with Thai law and international standards of customs valuation," it said.

PMTL is an affiliate of Philip Morris International Inc. and has imported and distributed cigarettes in Thailand since 1991. It currently employs more than 380 talented Thai employees in Bangkok and has offices in key cities around the country. PMTL is the number two tobacco company in Thailand, second only to the market-leading Thai Tobacco Monopoly.

Philip Morris is facing an eye-watering $2.2 billion fine if found guilty of dodging tax on cigarette imports to Thailand, Agence France-Presse reported on Tuesday.

The allegations are part of a long simmering tax dispute between the kingdom the local unit of the tobacco company, which has also clashed with authorities over plans to increase the size of health warnings on cigarette packets.

Thai prosecutors say Philip Morris, which owns the Marlboro and L&M brands, avoided around 20 billion baht ($551.27 million) tax by under declaring import prices for cigarettes from the Philippines between 2003 and 2006.

"Philip Morris as a corporation, as well as seven Thais, were indicted yesterday on custom tax evasion," Somnuk Siengkong, a spokesman for Thailand's Office of the Attorney General told reporters on Tuesday. – VS/JST, GMA News