Mighty offer needs PCC review — DOF
The government’s acceptance of Mighty Corp.’s full settlement offer for its tax liabilities will still depend on the approval of the Philippine Competition Commission (PCC) on the sale of the company’s business to Japan Tobacco International (JTI) Philippines Inc., the Department of Finance (DOF) said yesterday.
Finance Secretary Carlos Dominguez said the remaining P26.5 billion estimated to be collected by the government from the sale of Mighty Corp. to JTI Philippines is still yet to be seen pending the PCC’s approval on the acquisition deal.
“The date of full collection will depend on how fast the PCC approves the sale of Mighty’s assets to the JTI, whose largest shareholder, incidentally, is the Japanese government. Mighty will be out of the cigarette manufacturing business from now on,” Dominguez said.
The PCC is an independent quasi-judicial body created under Republic Act 10667 aimed to promote and maintain market competition and a level playing field for business.
Under Section 3 of the law’s implementing rules and regulations, parties to any merger or acquisition (M&A) are required to notify and seek prior approval from the commission if the value of the transaction exceeds P1 billion.
Earlier, Dominguez said the government may collect P30 billion from JTI’s acquisition of Mighty Corp., which has a transaction value of P45 billion.
Of this amount, P25 billion will go to the government’s pocket as settlement for Mighty Corp.’s tax liabilities, while an additional P5 billion will be collected as valueadded tax (VAT) from the buyout.
The first tranche of the payment amounting to P3.44 billion has already been received by the Bureau of Internal Revenue (BIR) last July 20.
“This will be the largest sum of taxes collected ever from a single taxpayer in Philippine history,” Dominguez said.
He added that an additional P1 billion could also potentially be collected by the BIR every month if JTI complies with excise tax payments upon the acquisition of Mighty’s business.
However, Dominguez earlier said the government has yet to formally approve the settlement offer from Mighty.
Dominguez also reiterated that the criminal charges against Mighty cannot be dismissed even if the government does accept the proposal.
The BIR has so far filed three tax evasion cases against Mighty Corp. due to alleged non-payment of excise taxes due its cigarette products and the use of counterfeit tax stamps, which correspond to a combined tax liability assessment of P37.88 billion.