Appeal court orders tobacco tax-dodging fine cut

The Court of Appeal on Tuesday ordered a reduction to a 130-million-baht fine imposed on the tobacco giant Philip Morris for evading tax on cigarettes imported from Indonesia.

A lower court handed down the original penalty in March 2020 to the local unit of the company, which owns the Marlboro and L&M brands.

On Tuesday appeal court officials said judges had ruled the amount be lowered, with the Customs Department to calculate the new fine at a later date. Philip Morris said it would appeal the decision to the Supreme Court.

The case, which began in 2017, centres on accusations that the company under-declared import prices for cigarettes from Indonesia in 2002 and 2003.

The appeal court also reaffirmed a decision by the lower court to drop charges against a former Philip Morris employee.

Philip Morris Thailand branch manager Gerald Margolis welcomed the reduction in the fine but said the company maintains “our position that we have done nothing wrong”.

“Over the last decade, both Thai and international authorities have reviewed (Philip Morris Thailand Ltd) import prices and we believe our customs practices have been consistent with Thai customs valuation laws and international legal requirements,” Mr Margolis said in a statement.

“We will continue to evaluate the court’s decision and believe we have strong arguments for the Supreme Court to overturn the decision.”

Philip Morris Thailand previously faced legal action for evading hundreds of millions of baht in import taxes on cigarettes from the Philippines between 2003 and 2006.

Last year the Court of Appeal trimmed the fine in that case from 1.2 billion baht to 121 million baht.

In the earlier case, Philip Morris (Thailand) was found to have set the price of L&M cigarettes imported from the Philippines at 5.88 baht a pack, while other importers declared the same brand at 16.81 baht. Marlboro imports were set at 7.76 baht per pack, against 27.46 baht reported by other importers.