Taxes due from the local unit of Japan Tobacco International (JTI) could boost government revenues by P2 billion monthly in the wake of the firm’s acquisition of local cigarette maker Mighty Corp.
Teresita Angeles, Assistant Commissioner for the Bureau of Internal Revenue’s (BIR) Large Taxpayers Service, said that JTI had committed of paying P40 million every week as part of the buy-out deal.
“So we are expecting the collection more or less to increase to P2 billion per month,” she told reporters in an interview.
BIR collections grew by 9 percent to reach P171.7 billion in August. Year-to-date growth was also at 9 percent, with collections as of end-August amounting to P1.157.7 trillion.
Finance Secretary Carlos Dominguez 3rd said the additional BIR collections could increase further due to JTI’s expected higher profitability and higher prices of cigarettes.
“The additional estimate is only from the beginning. Obviously the new owners of the brand and the new manufacturers have not yet geared up their marketing, so if they are able to sell more of course that amount will increase,” he said.
“Secondly, when you break down inflation, it is [prices of]alcohol and cigarettes that have gone up the highest. So that means to say what we did is working, that the change in ownership between Mighty and JTI has really benefited the government and has achieved the goals of the sin tax which is to raise the price of products that affect your health badly,” Dominguez added.
Besides a P25-billion payment accounting for the settlement of Mighty’s tax liabilities under the buyout, the government also expects to gain of an additional P5 billion from taxes on sale itself.
Officials earlier also said that another P500 million representing corporate income taxes would be forthcoming next year from JTI.
The money, the Department of Finance has said, will be used to rehabilitate Marawi City and upgrade the military’s anti-terrorist capabilities.