Tobacco giant Philip Morris faces $2.2 billion Thai tax fine

The company described the charges as "unjust" and vowed to fight them

Tobacco giant Philip Morris is facing an eye-watering $2.2 billion fine if found guilty of dodging tax on cigarette imports to Thailand, prosecutors said on Tuesday.

The allegations are part of a long simmering tax dispute between the kingdom and 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.
 
Chartpong Chirabandhu, deputy director general of the office's special litigation department, said a court could impose a fine of up to 80 billion baht ($2.2 billion) if the company was found guilty.

Four foreign executives at the company have also been charged but are outside the country, prosecutors added.

Philip Morris Thailand Limited described the charges as "unjust" and vowed to fight them.

"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," the company said in a statement.

The cigarette manufacturer added that their import valuations complied with World Trade Organization agreements and had been cleared by local Thai customs officials.

The investigation first surfaced in 2006 under the administration of Thaksin Shinawatra, shortly before his ousting in a military coup.

Thailand has since been hit by a decade of political instability with frequent government changes and a second coup in 2014.

In 2011, the attorney general at the time recommended against charging the tobacco giant, but the prosecution was restarted two years later.