Gov’t open to settle with Mighty

March 14, 2017 at 14:00

Gov’t open to settle with Mighty

President Duterte is open to a compromise with cigarette firm Mighty Corp. which is potentially  facing a billion-peso tax evasion case.
The President, in a chance interview in Davao Del Sur, said he is willing to forget and even drop the potential tax evasion case provided the cigarette company pays government P3 billion in terms of hospital constructions and refurbishing.

Malacanang later clarified the settlement amount being eyed is P5 billion subject to the approval of Carlos Dominguez III, secretary of the Department of Finance and Nicanor Faeldon, commissioner of the Bureau of Customs (BOC).

Duterte said Mighty  was offering to pays P1.5 billion in exchange for dropping potential charges in connection with some P2.2 billion worth of smuggled and counterfeit products including cigarettes with fake stamps.

He said he is open to the offer provided the company doubles it and pay P3 billion which would be used to construct a hospital in Basilan and refurbish a hospital in Jolo and the Mary Johnston Hospital in Tondo in Manila.

The President said the money can be directly given to the Department of Health and Health Secretary Paulyn Ubial.

“You settle the case of tax evasion. All they have to do is to go to Dominguez,  Faeldon and (Internal Revenue Chairman Billy) Dulay of BIR… P3 billion… Do not give it to me, give it directly to the secretary of health. Have the hospital in Basilan completed, the one in Jolo refurbished, then you give another P1 billion to  Mary Johnston sa Tondo, (that’s fine with me),” Duterte said.

He earlier said he ordered the arrest of the owner of Mighty  in connection with the use of fake cigarette stamps.

Malaya Business Insight asked presidential spokesman Ernesto Abella if the President’s statement means other companies with tax cases can also enter into a compromise but no reply has been received at press time.

An industry source cited Section 263 of the Tax Code which states mere possession by a manufacturer or a  person of  locally manufactured products which are supposed to be taxed but the taxes of which  were not paid can subject that manufacturer or person to  a fine that is  not less than 10 times the amount of excise tax due on the articles.

The source said Section 263 further  states a manufacturer, owner or person in charge of any article subject to excise tax who removes or allows or causes the unlawful removal of any such articles from the place of production or bonded warehouse, upon which the excise tax has not been paid can be punished with a fine of not less than 10  times the amount of excise tax due on the articles.

Based on the initial assessment on  the value of excise tax of  the seized goods in a series of raids on Mighty  of  P1.1 billion, Mighty could be liable to pay  P11 billion, which is nowhere near the P5 billion or P3 billion being considered by the government.

Non-government organization Action for Economic Reforms (AER)  wants to government to take more decisive actions in going  after all the tobacco companies that are suspected to be engaged in illicit activities.

“Providing amnesty to Mighty for a measly P3 billion  is against the law. It will send a wrong signal to…  other tobacco companies that may be as guilty as Mighty in their involvement in similar illicit activities. This practice will deny the people of precious resources from the gov’t at the expense of public health programs especially for the poor,” said Jo-Ann Diosana, senior economics consultant of  AER.

Diosana said Mighty must pay the tax due and the fines and face the court.

The BOC and the BIR  are preparing an air-tight tax evasion case against Mighty in connection with the use of fake cigarette stamps that were seized along with other and smuggled items during a series of raids in Pampanga, General Santos and Zamboanga.

Mighty Corp. owner Alexander Wongchuking , early this week, went to the National Bureau of Investigation to deny the cigarettes seized from their warehouses in Pampanga last week were fake.

Yesterday, Justice Secretary Vitaliano Aguirre II said he has issued an immigration look-out bulletin order on Wongchuking and his brother, Ceasar Dy Wongchuking, who is a co-owner of Mighty.

On Wednesday, a driver and two employees of Mighty  were arrested  for violating a local waste disposal ordinance after they dumped boxes of cigarettes in San Isidro, Parañaque City.

Members of the City Environment & Natural Resources Office called the attention of driver Elmer Quintero, 46; Jun Mar Luna, 24; and John Rey Linatoc, 28, who were onboard an L300 van after throwing some 30 boxes of cigarettes with brand names King, Chelsea, and Marvels in a dump site on Sucat road.

An ordinance in Parañaque City prohibits residents and non-residents from disposing large amount of garbage.

The suspects said the dumped cigarettes  were  rejects.

Faeldon for his part said the BOC remains firm in its position to intensify operations against importers and manufacturers of smuggled and fake cigarettes despite a temporary restraining order (TRO) issued in favor of Mighty.

Last March 6, Manila Regional Trial Court Branch 1 judge Tita Bughao Alisuag issued a TRO preventing the BOC from conducting raids or inspections at the warehouses of Mighty for 20 days, from March 3 to 23.

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