The full collection of the civil settlement of the tax liabilities of Mighty Corp. will depend on how fast the approval of the sale of its assets to Japan Tobacco (Philippines) Inc. (JTI) is approved by the Philippine Competition Commission (PCC).
Finance Secretary Carlos G. Dominguez III said Mighty Corp.’s offer to settle its tax liabilities for P25 billion will rise to around P30 billion, once the value-added tax (VAT) and other fees are included in the computation of the final settlement sum.
This will be the largest sum of taxes collected ever from a single taxpayer in Philippine history.
The date of full collection will depend on how fast the PCC approves the sale of Mighty Corp.’s assets to JTI whose largest shareholder, incidentally, is the Japanese government. Mighty Corp. will be out of the cigarette manufacturing business from now on,” Dominguez said in a speech at the Davao Investment Conference held at the Lanang SMX Convention Center.
The PCC is an independent quasi-judicial body created by law to promote and maintain market competition and a level playing field for business by checking anti-competitive practices.
Under Section 3 of the implementing rules and regulations (IRR), parties to any merger or acquisition (M&A) are required to notify and seek prior approval from the Commission if the value of the transaction exceeds P1 billion.
The Bureau of Internal Revenue (BIR) has already received the first tranche of Mighty Corp.’s settlement offer of P3.44 billion on July 20, according to the Department of Finance.
Last week Dominguez said the receipt of the initial amount does not mean the government has already formally accepted Mighty Corp.’s P25-billion offer.
The finance chief further said that even if the government accepts the settlement, it does not preclude criminal charges the BIR may file against the homegrown tobacco firm “as criminal cases cannot be compromised”. He added future sin-tax collections of the government are expected to rise by an estimated P1 billion per month, which can be used to improve health-care facilities and pay for additional medicines, commodities and services that help prevent and control deadly diseases caused by tobacco use.
Dominguez said Mighty Corp.’s offer to finally settle its tax liabilities after the BIR and the Bureau of Customs worked together to expose its tax-dodging practices shows that aside from tax reform, the government is bent on implementing improvements in tax administration to raise more revenues.