New Mighty owner short of tax stamps

MANILA, Philippines — After slapping Mighty Corp. with tax evasion complaints for alleged use of fake tax stamps in recent months, the government, it turns out, is unable to cope with the orders for cigarette tax stamps made by Mighty’s new owner, the Japan Tobacco Group, sources said.

JTI Philippines Inc. is facing this major stumbling block, just weeks after completing its P45-billion buyout of the Bulacan-based cigarette company.

It is unable to get cigarette tax stamps from APO Production Unit (APO), which is in charge of the supply and delivery of tax stamps. 

Over the past two weeks, JTI paid P6 billion to acquire roughly 180 million cigarette tax stamps for its bigger portfolio of cigarettes but received only 25 million stamps, sources said.

Without the tax stamps, JTI will not be able to sell its cigarettes in the market.

JTI hopes to be able to get its full order of tax stamps soon so its can start selling their existing brands again as well as those of newly acquired Mighty and Marvel brands.

This latest development puts an ironic twist in the Philippine cigarette tax stamp saga involving the government and cigarette companies.

Mighty faced a string of tax evasion complaints from the Bureau of Internal Revenue (BIR) for alleged use of fake tax stamps, an allegation which company executives repeatedly denied.

Because of the cases, the Wongchuking family was left with no choice but to sell Mighty’s assets to JTI, the world’s third largest cigarette company.

JTI’s acquisition of Mighty was in line with the group’s geographic expansion for sustainable growth.

“It is also provides a nationwide distribution network in the Philippines and strengthens the group’s brand portfolio with the addition of local brands such as Mighty and Marvels,” JTI has said.

With the buyout, the Philippine cigarette industry is practically left with two players led by multinational companies.

PMFTC, a partnership between Philip Morris and Lucio Tan’s Fortune Tobacco, is the market leader with a 71 percent share. Mighty held a 23 percent share while JTI accounted for 4.2 percent of the market.

Meanwhile, JTI will absorb all the roughly 4,000 workers of Mighty including some 1,000 factory workers at the Bulacan plant.

Starting next year, the company will raise the prices of Mighty and Marvel brands by roughly P10 per pack to P70 from around P60.