THE Justice department on Friday dropped the tax- evasion complaints worth P37.9 billion against Mighty Corp. after the cigarette maker was sold to Japan Tobacco for a P30-billion-peso ($586-million) settlement.
The government had accused Mighty Corp, the country’s number-two cigarette manufacturer, of using counterfeit tax stamps to avoid paying P37.88 billionin taxes and threatened it with criminal charges.
However, in July President Rodrigo Duterte ordered the Finance department to accept a settlement under which Mighty, which has 23 percent of the local cigarette market, would drop out of the tobacco business.
“We could consider this case as closed. [The] government of the Philippines is 40 billion pesos richer,” Justice Secretary Vitaliano Aguirre told reporters.
Mighty Corp. settled the case with a 30-billion-peso payment and paid another 10 billion peso in taxes and penalties, he said.
Mighty had originally offered a 25-billion-peso settlement, Aguirre added.
The company sold off its assets to Japan Tobacco International in order to meet its tax deficiencies, the Finance department said earlier.
The Japanese firm, one of the world’s biggest tobacco companies, whose global brands include Winston and Camel, announced on Aug. 22 that it was purchasing Mighty for P46.8 billion.
Asked to comment on the Justice Department decision, a Japan Tobacco spokesman in Japan said “the tax liability is an issue that should be solved appropriately between Mighty Corp. and the Philippine government”.
In a joint resolution released on Friday, the Justice Department granted the Sept. 26, 2017 motion of the Bureau of Internal Revenue seeking the withdrawal of its complaints against Mighty Corp., which entered into a compromise settlement with the government. With AFP