Government to earn P30 B from sale of Mighty

MANILA, Philippines - The government could potentially earn P30 billion from the settlement offer of Mighty Corp., as well as the sale of its business and assets to Japan Tobacco International Inc., according to the Department of Finance (DOF).

Finance Secretary Carlos Dominguez said the cooperation between the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) have yielded the government “potentially the largest collection of taxes from any individual at one time ever in Philippine history.”

Earlier, Dominguez said the government is considering the proposal of Mighty Corp. to settle its tax liabilities for P25 billion, which would be funded through an interim loan and the sale of its business and assets to JTI Philippines.

The sale, according to Mighty president and director Oscar Barrientos, would amount to P45 billion, exclusive of value-added tax (VAT).

“That will mean a total take for us of roughly P30 billion, including VAT (on the sale of its business to JTI),” Dominguez said.

He added an additional P1 billion could also potentially be collected by the BIR every month if JTI complies with excise tax payments upon the acquisition of Mighty’s business.

The DOF has accepted P3.44 billion as initial payment from Mighty Corp. The remaining balance will be paid once Mighty and JTI conclude the deal.

However, Dominguez clarified the DOF has yet to formally approve the settlement offer. “We are studying it, but basically it seems like a good deal,” Dominguez said.

He said the settlement offer does not need the approval of the President, as the approval power lies within BIR commissioner Caesar Dulay.

Dominguez also reiterated the criminal charges against Mighty cannot be dismissed even if the government does accept the proposal.

The BIR has so far filed three tax evasion cases against Mighty Corp. due to alleged non-payment of excise taxes due its cigarette products and the use of counterfeit tax stamps, which correspond to a combined tax liability assessment of P37.88 billion.