The Department of Finance (DOF) on Thursday said receipt of P3.5 billion from Mighty Corp. as initial payment of its tax liabilities does not free the cigarette manufacturer from the consequences of its actions.
According to Finance Secretary Carlos G. Dominguez III, the DOF will receive the initial payment representing a portion of Mighty Corp.’s tax liabilities, but said such acceptance does not mean it agrees to the settlement offer.
Dominguez added that even if the government accepts Mighty Corp.’s settlement offer, this does not preclude the filing of criminal charges by the Bureau of Internal Revenue (BIR), as those complaints cannot be compromised.
“We will accept the initial payment,” Dominguez said.
Earlier, in a letter sent to Internal Revenue Commissioner Caesar R. Dulay dated July 10, Mighty Corp. offered to settle its tax liabilities amounting to P25 billion. The amount represents deficiency excise tax of P3.5 billion, and the internal-revenue tax of the manufacturer and its shareholders amounting to P21.5 billion.
According to the DOF, a manager’s check for P3.44 billion covering Mighty Corp.’s excise-tax liabilities was issued on Thursday by Japan Tobacco International (Philippines) Inc. (JTI), and deposited at the Land Bank of the Philippines Social Security System branch in
Quezon City.
The balance of P21.5 billion will be paid on or after the closing of the proposed deal with JTI.
Mighty Corp. President and Director Oscar P. Barrientos said the settlement sum would be funded by means of an interim loan from JTI and the sale by Mighty of its manufacturing and distribution business and assets along with the intellectual-property rights, including those owned by the company, Wong Chu King Holdings Inc., to JTI for a total purchase price of P45 billion, exclusive of value-added tax (VAT).
“The initial payment of P3.5 billion will be paid on the company’s behalf on or before July 20, 2017. A binding memorandum of agreement in relation to the proposed transaction with JTI will be concluded shortly and prior to July 20, 2017, subject to finalizing terms with JTI and JTI completing its due diligence,” Barrientos said.
Three tax-evasion cases have been filed by the BIR against Mighty Corp. at the Department of Justice (DOJ). The complaints cover the firm’s nonpayment of excise tax due its cigarette products and use of counterfeit tax stamps on its cigarette packs valued at P37.88 billion.
Based on its settlement offer, Mighty Corp. would remit to the government P3.5 billion in deficiency-excise tax on its cigarette products that are now the subject of three tax cases pending before the DOJ; and P21.5 billion representing the liabilities of the company and its shareholders, as well as company officers, for all internal-revenue taxes, including income tax from 2010 to 2016 and the tax period up to the closing of the proposed transaction with JTI, and all transaction taxes related to the agreement with JTI.
In a statement issued last week, JTI confirmed having conducted discussions on the sale of the cigarette manufacturing and distribution business of Mighty Corp.
“We can confirm that we have entered into exclusive talks with Mighty Corp. on the sale of its cigarette manufacturing and distribution business and assets,” JTI said in a statement.