Thursday , June 21, 2018

DOF: Mighty Corp. paying initial P3.5-B tax liabilities

MIGHTY Corporation would settle initial P3.5 billion, representing portion of its P25 billion tax liabilities with the government, the Department of Finance (DOF) said Thursday.

But Finance Secretary Carlos Dominguez III clarified that while the Duterte administration would accept payment from Mighty, it does not yet mean that it was agreeing to the company’s settlement offer and it does not preclude any criminal charges that the Bureau of Internal Revenue (BIR) may file in connection with the firm's tax-related cases, as these cannot be compromised.

"We will accept the initial payment," Dominguez said.

In its letter to BIR Commissioner Caesar Dulay dated July 10, Mighty offered to settle its tax liabilities for P25 billion. The amount represents the deficiency excise taxes (P3.5 billion) and the internal revenue taxes of the company and its shareholders (P21.5 billion).

The letter signed by Mighty President and Director Oscar Barrientos, said that it was confirming "the Company's willingness to settle all such excise and tax issues and respectfully offer as settlement of the Company's shareholders' and its officers' liability in this regard the total sum of P25 billion."

Barrientos said in his letter that this settlement sum would be funded by means of an “interim loan” from JT International Philippines (JTI) and the sale by Mighty and its affiliates of its manufacturing and distribution business and assets, along with the intellectual property rights associated with these assets, “including those owned by the company, Wong Chu King Holdings Inc., and other affiliates to JTI or any of its affiliates for a total purchase price of P45 billion exclusive of VAT.”

The DOF said it was informed that a manager’s check amounting to P3.44 billion, covering Mighty’s excise tax liabilities, would be issued by JTI and deposited at the SSS branch of the Land Bank of the Philippines in Quezon City on Thursday.

The balance of P21.5 billion will be paid on or after the closing of the proposed deal with JTI.

Three tax cases filed by the BIR against Mighty Corp. are now pending before the Department of Justice (DOJ). These cases cover the firm’s non-payment of excise taxes due its cigarette products and use of counterfeit tax stamps on its cigarette packs, which correspond to excise taxes valued by the BIR at a combined P37.88 billion.

Barrientos also requested the BIR in its letter for a reinvestigation of its pending criminal complaints before the DOJ following the initial payment of the P3.5 billion, along with a certificate of payment. (SDR/SunStar Philippines)