(Eagle News) — The country’s second largest cigarette manufacturer has entered into a P40-billion compromise settlement with the Philippine government for its multi-billion peso tax liability, the payment of which will go to the infrastructure program of President Rodrigo Duterte’s administration.
Malacanang on Saturday welcomed the P40 billion settlement of Mighty Corporation which had earlier made an initial payment of P3.44 billion to the Bureau of Internal Revenue.
Presidential spokesperson Ernesto Abella, in a statement, said the tax settlement is the largest in Philippine history” and will go a long way in funding the Duterte administration’s infrastructure program.
“Mighty Corporation, the country’s number two cigarette manufacturer, has entered into a P40-billion compromise settlement with the government regarding its tax liability,” Abella said in a statement aired over Radio Pilipinas.
Initially, Mighty President and Director Oscar Barrientos made a P25-billion offer in a letter sent to BIR Commissioner Cesar Dulay on July 10.
This offer allegedly includes P21.5 billion for its internal revenue tax liabilities including income taxes from 2010 until it clinched an acquisition deal with Japan Tobacco, and P3.5 billion for excise tax deficiencies on its tobacco products.
Before this deal, Mighty made an initial payment of P3.44 billion to the government.
Manila had accused Mighty Corp of using counterfeit tax stamps to avoid paying 37.88 billion pesos in taxes, and threatened it with criminal charges.
However in July, President Rodrigo Duterte ordered the finance department to accept a settlement, under which Mighty, which has 23 percent of the local cigarette market, would drop out of the tobacco business.
– Case closed-
“We could consider this case as closed. (The) government of the Philippines is 40 billion pesos richer,” Justice Secretary Vitaliano Aguirre told reporters.
The company settled the case with a 30-billion-peso payment, and paid another 10 billion in taxes and penalties, he explained.
Mighty had originally offered a 25-billion-peso settlement, Aguirre added.
The company sold off its assets to Japan Tobacco International in order to meet its tax deficiencies, the finance department said earlier.
The Japanese firm, one of the world’s biggest tobacco companies, whose global brands include Winston and Camel, announced on August 22 that it was purchasing Mighty for 46.8 billion pesos.
Asked to comment on the justice department decision, a Japan Tobacco spokesman in Japan said “the tax liability is an issue that should be solved appropriately between Mighty Corp and the Philippine government”.
Presidential Spokesperson Abella said that the Duterte administration will still continue in its campaign against corruption and delinquent taxpayers, “haling violators to court, if necessary.”
“As citizens cooperate, we build a comfortable life for all. Strong political will to benefit all, and not just a few, should be the trademark of the entire government,” Abella said.
(Eagle News Service with Agence France Presse)
