President Rodrigo Duterte directed the Department of Finance (DoF) and the Bureau of Internal Revenue (BIR) on Monday to accept the P25 billion tax settlement offered by local cigarette maker Mighty Corp.
“I have directed the DoF and the BIR to accept Mighty Corporation’s offer of P25 billion to settle its tax liabilities,” President Duterte said in his second State of the Nation Address (SONA).
Three tax cases filed by the BIR against Mighty are pending before the Department of Justice. The cases cover the company’s non-payment of excise taxes due on its cigarette products and the use of counterfeit tax stamps on its cigarette packs, which correspond to excise taxes amounting to P37.88 billion.
Despite the deal, the President said Mighty will no longer engage in the tobacco business.
“This will be the biggest tax settlement on record. It will produce a windfall for the government, which is significant since we have to face the unexpected costs of rebuilding Marawi and Ormoc,” he said.
Duterte also stressed that the acceptance of the tax settlement offer does not preclude other criminal charges against the company, which the BIR may file later.
“A settlement will allow the government to avoid a long court battle that, as we saw in previous years, could take years to resolve. Let this be a lesson to others. This administration will spare no one found cheating the government of its due,” he said.
In an earlier statement, the DoF said the government’s full collection of Mighty Corp.’s civil settlement of its tax liabilities will depend on how swiftly the anti-trust body Philippine Competition Commission approves the sale of the local cigarette maker’s assets to JT International Philippines (JTI).
Finance Secretary Carlos Dominguez 3rd has said Mighty’s offer to settle its tax liabilities for P25 billion will rise to about P30 billion once the value-added tax (VAT) and other fees are included in the computation of the final settlement sum.