Gov’t poised to accept Mighty’s settlement offer

The Duterte administration is poised to accept a multi-billion peso settlement offer by the embattled cigarette-maker Mighty Corp. as the Wongchukingowned firm signed an agreement with Japan Tobacco International (JTI) to rescue them from tax woes.

A binding memorandum of agreement was signed earlier this week by members of the Wongchuking family, paving the way for JTI Philippines to proceed with the issuance of a manager’s check amounting to R3.44 billion, which the government accepted.

The Department of Finance (DOF) said yesterday in a statement the R3.44 billion is just an initial payment, which covers Mighty Corp.’s excise tax liabilities. The check was deposited at the SSS branch of the Land Bank of the Philippines in Quezon City

Speaking to Manila Bulletin on condition of anonymity, sources said the transaction between Mighty Corp. and JTI Philippines is “a done deal,” noting the Japanese-firm already deposited R21.5 billion into an escrow account at a state-owned bank.

“The balance of R21.5 billion will be paid on or after the closing of the proposed deal with JTI,” the DOF said.

Finance Secretary Carlos G. Dominguez III, meanwhile, clarified that while the government accepted the R3.44-billion initial payment from Mighty Corp., this “does not yet mean that it was agreeing to the company’s settlement offer.”

Dominguez also reiterated that even if the government accepts Mighty Corp.’s settlement offer, this does not preclude any criminal charges that the Bureau of Internal Revenue (BIR) may file

against the company in connection with its tax-related cases.

“Criminal charges cannot be compromised,” the finance chief pointed out.

Sources, meanwhile, said the buyout deal between JTI Philippines and Mighty Corp. would be included in the second State of the Nation Address (SONA) of President Rodrigo R. Duterte on Monday.

“The President would likely order Dominguez to accept the compromise offer by Mighty,” an industry source said.

In a letter to BIR Commissioner Caesar Dulay dated July 10, Mighty Corp. offered to settle its tax liabilities for R25 billion on July 20. The amount represents the deficiency excise taxes (R3.5 billion) and the internal revenue taxes of the company and its shareholders (R21.5 billion).

The letter signed by Mighty President and Director Oscar Barrientos, said that it was confirming “the Company’s willingness to settle all such excise and tax issues and respectfully offer as settlement of the Company’s shareholders’ and its officers’ liability in this regard the total sum of R25 billion.”

There are three tax cases filed by the BIR against Mighty Corp., which are now pending before the Department of Justice (DOJ).

These cases cover the Mighty Corp.’s non-payment of excise taxes due its cigarette products and use of counterfeit tax stamps on its cigarette packs, which correspond to excise taxes valued by the BIR at a combined R37.88 billion. (CSL)