Dominguez: Mighty’s P45-b deal needs PCC nod

Finance Secretary Carlos Dominguez III said the P30-billion tax compromise between the government and Mighty Corp. will depend on how swiftly the Philippine Competition Commission can approve the sale of the cigarette company’s assets to Japan Tobacco International.

Dominguez said Mighty’s offer to settle its tax liabilities for P25 billion would rise to around P30 billion once the value-added tax and other fees were included in the computation of the final settlement sum.

President Rodrigo Duterte in his State of the Nation Address asked the Bureau of Internal Revenue to accept the P25-billion offer of Mighty, which he said could be used in the rehabilitation of Marawi City.

Finance Secretary Carlos Dominguez III
“This will be the largest sum of taxes collected ever from a single taxpayer in Philippine history. The date of full collection will depend on how fast the Philippine Competition Commission approves thesale of Mighty’s assets to the Japan Tobacco International whose largest shareholder, incidentally, is the Japanese government,” Dominguez said in a statement.

Mighty, in a letter to the BIR, earlier disclosed its plan to sell the company and affiliates of its manufacturing and distribution business and assets, along with the intellectual property rights associated with these assets, “including those owned by the company, Wong Chu King Holdings Inc., and other affiliates to JTI or any of its affiliates for a total purchase price of P45 billion exclusive of VAT.”

“Mighty will be out of the cigarette manufacturing business from now on,” said Dominguez in his speech at the Davao Investment Conference held at the Lanang SMX Convention Center in Davao City over the weekend.

PCC is an independent quasi-judicial body created by law to promote and maintain market competition and a level playing field for business by checking anti-competitive practices.

Section 3 of the implementing rules and regulations of the PCC provides that parties to any merger or acquisition are required to notify and seek prior approval from the commission if the value of the transaction exceeds P1 billion.

The Bureau of Internal Revenue already received the first tranche of Mighty’s settlement offer of P3.44 billion on July 20, Dominguez said.

Dominguez said earlier that the receipt of this initial amount did not mean that the government already formally accepted Mighty’s P25-billion offer.

Dominguez also said even if the government finally accepted the settlement, it would not preclude any criminal charges that the BIR might file against Mighty, “as criminal cases cannot be compromised.”

Dominguez said Mighty’s offer to finally settle its tax liabilities after the BIR and the Bureau of Customs worked together to expose its tax dodging practices showed that besides tax reform, the Duterte administration was also bent on implementing significant improvements in tax administration to raise more revenues.

He said in his Davao speech that tax policy reforms would be instituted via the proposed Comprehensive Tax Reform Program, of which the first package―the Tax Reform for Acceleration and Inclusion Act was recently approved by the House of Representatives.

Besides “revenue-positive” measures from tax reform, the government will also resort to a sustainable borrowing strategy by tapping official development assistance to get infrastructure projects implemented faster and at lower financing costs, he said.

Topics: Finance Secretary Carlos Dominguez III , Mighty Corp. , Philippine Competition Commission , Japan Tobacco International , tax liabilities
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