Senate office pins down Mighty Corp.

THE Senate Tax Study and Research Office (STSRO) has found out what could be an improbable pricing of tobacco-leaf imports by Mighty Corp. as compared to those imported by Philip Morris Fortune Tobacco Corp. (PMFTC) and Associated Anglo-American Tobacco Corp.

Also, the Senate office, which furnished its report to Sen. Juan Edgardo M. Angara, chairman of the Senate Committee on Ways and Means, found out that the supposed suppliers that Mighty Corp. has identified for its tobacco-leaf imports have disputed the Bulacan firm’s assertions.

The study is deemed significant in view of the contention of PMFTC President Paul Riley that  “Mighty can no longer hide from the facts which expose their questionable business practices.”

“Acetate tow prices paid by two cigarette manufacturers steadily increased over the four-year period [starting 2010]: Associated Anglo American Tobacco Corp. and Philip Morris Fortune Tobacco Inc.,” while “the prices paid by Mighty Corp., on the other hand, remained nearly the same every year,” the study said.

Aside from this, the Senate study said, “The prices of acetate tow imports by Mighty Corp. are the same ($0.36) regardless of country of origin, with the exception of Germany ($.54 in 2013); Indonesia ($0.48 in 2012 and Thailand ($1.50, 2011).”

It is these improbable tax import prices that Philip Morris has questioned and which is the reason for the advertisements the company made to question the way Mighty Corp. is doing business, which, Riley said, robs the government of precious revenues.

“Every company should pay their fair share of taxes for the development of the nation. This is the resounding message. We are hopeful that this would lead to more positive results,” Riley said.

The improbable pricing of Mighty’s imports was also cited by the Senate study, which was signed by lawyer Rodelio Dascil, STSRO director general, and submitted to the office of Angara on  September 18, and which the BusinessMirror obtained.

According to the study, the prices submitted by Mighty Corp. to the National Tobacco Administration are “outliers, not even a 10th of the prices paid for by either Associated Anglo or Philip Morris.”

Backing this theory on Mighty’s
improbable pricing, according to the study, were the findings made that show that Mighty has not been transparent in its citations as to its supposed suppliers of tobacco imports.

Citing reports transmitted by the Philippine Commercial Counselor in Washington, D.C. , the report said the “US companies which Mighty Corp. claimed to be its suppliers dispute its report to the Bureau of Customs.”

As per the transmittal from the embassy, the Senate office said, “Supplier 1 made no direct sales to Mighty. Also, in the case of Supplier 2, the reported summaries of acetate tow purchases by Mighty Corp. do not accurately reflect our sales of acetate tow to Mighy and in the case of Supplier 3, it said that it did not have any direct sales to Mighty.”

For Riley,  “Mighty can no longer hide from the facts which expose their questionable business practices, described by a senator as a clear act of fraud.  The Congressional inquiry highlighted the questionable business practices by Mighty.”

These practices include: using imported materials to make cigarettes for export but diverting them to the domestic market without paying duties and taxes; and undervaluing the cost of tobacco and filter imports to evade customs duties and import  value-added tax (VAT).

“Mighty’s questionable business practices not only harm legitimate tax-paying companies like us but also significantly impacts key government programs as envisaged in the sin tax law,” Riley said.

These practices, he said, include:

• Using imported materials to make cigarettes for export but diverting them to the domestic market without paying duties and taxes; and

• Undervaluing the cost of tobacco and filter imports to evade customs duties and import VAT.