Mighty Corp. settlement offer depends on approval of asset sale to Japan Tobacco

The settlement of Mighty Corp.'s tax liabilities with the government is highly contingent on the approval by the Philippine Competition Commission (PCC) of the sale of the cigarette maker's assets to Japan Tobacco International, the Department of Finance (DOF) said Monday.

"The data of full collection will depend on how fast the Philippine Competition Commission (PCC) approves the sale of Mighty Corp.'s assets to the Japan Tobacco International (JTI) whose largest shareholder, incidentally, is the Japanese government," Finance Secretary Carlos G. Dominguez III said.

Mighty Corp. offered to settle its tax liabilities for P25 billion, which Dominguez said could rise to as much as P30 billion once the value-added tax (VAT) and other fees are included in the computation of the final settlement.

The company plans to fund its tax liabilities with the proceeds of the sale of its assets to JT International (Philippines), a unit of Japan Tobacco International. But the transaction would have to be approved by the PCC, which reviews all business transactions in the Philippines valued at more than P1 billion.

According to the implementing rules and regulations (IRR) of the antitrust body, a review of any merger and acquisition consists of two phases and may take up to 90 days.

"This will be the largest sum of taxes collected ever from a single taxpayer in Philippines history," Dominguez noted.

In March, the Bureau of Internal Revenue (BIR) sued Mighty Corp. before the Department of Justice for supposedly using bogus tax stamps.

Justice Secretary Vitaliano N. Aguirre II earlier said Mighty Corp. gave in to President Rodrigo R. Duterte's offer to pay P3 billion to settle its excise tax liabilities.

Dominguez, however, found the amount too small, saying the Bulacan-based cigarette maker must pay 10 times over its assessed liability.

In a letter to BIR Commissioner Caesar R. Dulay, Mighty Corp. said it was willing to pay the government P25 billion. The DOF said it accepted an initial payment of P3.44 billion, but that the company still faces other criminal charges. — Jon Viktor Cabuenas/VDS/KVD, GMA News