By Elijah Joseph C. Tubayan
Reporter

EMBATTLED tobacco company Mighty Corp. has entered into a deal for the company’s sale to settle its tax liabilities, a statement by the Department of Finance (DoF) disclosed on Wednesday, July 12.

DoF said it is studying the settlement offer made by Mighty — which currently faces three criminal charges due to non-payment of excise taxes — to cover for their tax deficiencies through the sale of its assets to Japan Tobacco International (JTI) Philippines.

“We are studying the offer,” Finance Secretary Carlos G. Dominguez III said in a statement, reacting to the written settlement proposal sent by Mighty Corp. president and director Oscar P. Barrientos to Bureau of Internal Revenue (BIR) Commissioner Caesar R. Dulay in a letter dated July 10.

Mighty’s letter offers to settle P25 billion in tax liabilities by June 20, through an “interim loan” from JTI Philippines, and through the sale of Mighty Corp. 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. — to JTI Philippines worth P45 billion, exclusive of value-added tax (VAT).

Broken down, Mighty Corp. will remit to the government P3.5 billion on June 20 in deficiency excise taxes on its cigarette products that are now the subject of three tax cases, and P21.5 billion for the liabilities of the company and its shareholders, as well as the company officers for all internal revenue taxes, including income tax from 2010 to 2016 and the tax period up to the closing of the proposed transaction with JTI, and all transaction taxes related to the agreement with JTI, paid upon completion of the deal between the two firms.

“The initial payment of P3.5 billion will be paid by the company on the company’s behalf on or before July 20, 2017. A binding Memorandum of Agreement in relation to the Proposed Transaction (with JTI) will be concluded shortly (and prior to July 20, 2017) subject to finalizing terms with JTI and JTI completing its due diligence,” the letter read.

The DoF noted, however, that the offer was separate from the criminal complaints the tobacco firm currently faces due to non-payment of excise taxes and possession of counterfeit internal revenue stamps.

After separate raids by the BIR and Customs bureau at Mighty Corp.’s warehouses in Bulacan, Pampanga, and General Santos, the tax bureau filed three criminal complaints before the Justice department that totaled to P37.88 billion.

The Bureau of Customs, for its part, blacklisted the tobacco firm’s import accreditation to prevent them from continuing operations pending the conclusion of the criminal complaints.

Moreover, the DoF said Mr. Barrientos has requested the tax bureau for a reinvestigation of its pending criminal complaint, upon completion of the initial P3.5-billion payment.

“We also respectfully request the BIR to issue to the Company and its shareholders and officers following closing of the proposed transaction (with JTI) and the payment of the P21.5 billion the relevant Certificate of Availment of Compromise, a final tax assessment for all the Company’s excise and other tax issues described above, and relevant tax clearances to the Company, its shareholders and officers,” the letter said.

The DoF said Mr. Barrientos committed to retire the operations of Mighty Corp. following the conclusion of its deal with JTI.

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