DoF’s Dominguez calls P25-billion Mighty settlement ‘a good deal’
FINANCE Secretary Carlos G. Dominguez III said cigarette manufacturer Mighty Corp.’s P25-billion settlement offer to cover its tax liabilities “seems like a good deal,” though he added that the offer is not yet approved.
The company’s tax problems triggered a takeover offer for Mighty by JT International (Philippines), Inc. which helped provide the initial settlement payment of P3.44 billion last week.
“We have not approved, we have not formally approved (the settlement), but of course if somebody will come up and give us P3.44 billion of course we will not say no. We are studying it. But basically it seems like a good deal,” he told reporters on Friday at the Finance department headquarters in Manila.
Mr. Dominguez said that upon conclusion of the JT takeover of Mighty, the benefit to the government is at least P30 billion, inclusive of value-added tax ( VAT).
Assuming the new owner is compliant in paying its excise tax liabilities, the government could raise an additional P1 billion every month.
“That will mean total take for us of roughly P30 billion including VAT, as well as increase in excise tax every month of a conservative amount of P1 billion and up. If we accept the total tax it will be… slightly in excess of P30 billion,” he said.
The P3.44 billion payment is the first tranche of the P25 billion proposed settlement, which represents unpaid excise tax liabilities on its cigarettes.
The remaining P21.5 billion balance — which represents the income tax deficiencies of the firm’s officers from 2010 to 2016 — will be paid upon completion of the acquisition deal between the two firms.
According to Mr. Dominguez, the deal does not need the President’s permission as it lies solely on the hands of the Bureau of Internal Revenue (BIR).
“That does not need the approval of the President… technically speaking the approval power lies with the BIR Commissioner, by law,” he said.—