BIR files P9.56-B tax case vs Mighty Corp.

THE Bureau of Internal Revenue (BIR) filed a P9.56-billion tax-evasion case against local tobacco firm Mighty Corp. before the Department of Justice (DOJ) on Wednesday over the company’s reported use of fake tax stamps.

According to the BIR, those included in the complaint were Mighty Corp. President Edilberto P. Adan, Executive Vice President Oscar P. Barrientos, Vice President for External Affairs and Assistant Corporate Secretary Alexander D. Wongchuking, and Treasurer Ernesto A. Victa.

They were charged for unlawful possession of articles subject to excise tax without payment of the tax, and for possessing false, counterfeit, restored or altered stamps, in violation of Sections 263 and 265 (c) of the National Internal Revenue Code of 1997.

“As a consequence of its acts and omissions, Mighty Corp., together with its responsible corporate officers, is liable to pay an estimated aggregate excise-tax liability in the total amount of P9.564 billion,” a statement from the BIR said. The bureau is pursuing the case under its Run After Tax Evaders program.

Earlier in the month, the Burea of Customs (BOC), together with examiners from the BIR, conducted raids in warehouses in General Santos City, Zamboanga, and Pampanga, which led to the seizure of cigarette packs bearing fake tax stamps. Five of the warehouses raided in the Pampanga area were reportedly subleased to Mighty Corp.

The BOC and the BIR estimated revenue losses from nonpayment of excise taxes amounting to P1.1 billion, based on the value of the seized products. The operation in Zamboanga City yielded 400 master cases of counterfeit smuggled cigarettes, with an estimated street value of P13.5 million. For the raid in General Santos City, the authorities were able to seize 11,044 master cases of assorted cigarettes, with approximate street value of P215 million. In the Pampanga raid, 62,000 master cases, containing over P1.957 billion worth of assorted cigarettes, were seized.

The mere possession of the seized tobacco products with fake internal-revenue stamps violates the Tax Code, according to the BIR.

Mighty Corp., through its legal counsel Sigfrid A. Fortun, said the company “welcomes the filing by the BIR of the complaint, as it provides us an opportunity to clear our names and show we violated no tax laws. We will continue to cooperate with the government in its continuing effort at tax collection.”

Internal-revenue stamps affixed on the seized cigarette packs were tested using a Taggant reader, a BIR-registered equipment used to test the authenticity of tax stamps. It confirmed that the stamps are not authentic, according to the BIR.

The bureau added that the inventory of the warehouses also showed that Mighty Corp. stored 66,281 master cases containing 33,140,500 packs of cigarettes, with 87.5 percent of the said packs bearing fake internal-revenue stamps.

Despite the increase in excise taxes collected by the government in 2016, which amounted to P163.5 billion, from the P158.3 billion in 2015 based on BIR preliminary data, taxes from tobacco products only amounted to P91.6 billion for the year, from P99.5 billion in 2015.

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