Government to lose RM1 billion in unrealised taxes due to exponential trading of illicit cigarettes

PETALING JAYA: The government will likely lose RM1 billion in unrealised taxes on tobacco products during the movement control order (MCO) that was imposed on March 18. The legal tobacco industry said this conclusion is based on the average daily movement of cigarettes for which duty has been paid and the estimated volume of illicit cigarettes in the market (based on 2019 data). Japan Tobacco International (JTI) Malaysia told TheSun that projected losses could hit RM2 billion to RM3 billion if the MCO is extended further. “The government is losing about RM17 million in uncollected taxes daily.” JTI Managing Director Cormac O’Rourke said tobacco products are part of the “basket of goods” in the consumer price index (CPI) that tracks the country’s inflation rate. “It is recognised as one of the essential items that must be available for sale through retail channels.” The trading of illicit cigarettes has grown “exponentially” during the MCO as syndicates resort to “creative online methods” to get around the restriction on physical movements to reach end users. “They have resorted to using e-commerce and social media platforms, couriers and even food delivery riders to move contraband, including illicit cigarettes in open defiance of the law,” Cormac added. The country could lose RM5 billion in taxes annually due to the proliferation of contraband cigarettes despite the government pledging to take action. Malaysia has taken the top spot in illicit cigarette sales, according to Euromonitor. Read the story on our iPaper: RM1 billion up in smoke

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