Executives of Flava, Flare, and Denkat Brands Sued by Philippines' BIR for Alleged Tax Evasion, Involving $160 Million

Overview of the incident:

Date and Location: April 29, 2025, Philippines.

Parties involved: Bureau of Internal Revenue (BIR) of the Philippines vs. executives of Flava, Flare, and Denkat brand companies.

Case background: The Bureau of Internal Revenue (BIR) has filed tax evasion lawsuits with the Department of Justice, accusing multiple e-cigarette brands of being unregistered and failing to pay consumption tax, involving a total amount of 8.7 billion pesos (approximately 160 million dollars).

Primary accusations: Tax evasion, failure to report sales tax, illegal possession of untaxed products.

Case Update: The BIR has filed charges and warned that they will continue to hold illegal practitioners and promoters accountable.

According to the Manila Bulletin on April 29th, the Bureau of Internal Revenue (BIR) has filed a tax evasion lawsuit with the Department of Justice (DOJ) against unregistered e-cigarette product importers and distributors, involving an amount of up to 8.7 billion pesos (approximately 1.6 billion US dollars).

The BIR Director Romeo D. Lumagui, who is responsible for filing lawsuits, stated that the BIR has already warned all parties intending to enter the e-cigarette industry that they must register with the BIR and pay the corresponding taxes.

The individuals sued in this case are corporate executives from brands such as Flava, Denkat, and Flare. According to the charges, the individuals have violated the 1997 National Internal Revenue Code (NIRC), specifically including:

·According to Article 263, illegal possession of e-cigarette products that have not paid consumption tax is prohibited; 

·According to Article 254, tax evasion is prohibited; 

·According to Article 255, failure to declare consumption tax is prohibited.

Lumaji pointed out that it is expected that more criminal cases regarding illegal e-cigarette transactions will be filed in the future. He emphasized that, regardless of the scale of operation, anyone selling illegal e-cigarette products will face imprisonment.

In addition, he warned that celebrities and internet influencers who collaborate with illegal e-cigarette operators will not be exempt. He reminded that endorsers and advertisers should only promote legal and tax-compliant products. He urged the public to actively report stores selling illegal e-cigarette products.