Mighty eyes settlement with BIR on fake stamps

Mighty cigarette products kept in San Simon warehouse in Pampanga.   CONTRIBUTED PHOTO

Homegrown cigarette manufacturer Mighty Corp. is reportedly in talks with the government to settle unpaid excise taxes due to its alleged use of fake tax stamps, government and industry sources said.

A ranking Bureau of Internal Revenue (BIR) official confirmed that Bulacan-based Mighty had expressed interest to pay the foregone revenues that the government lost from counterfeit tax stamps.

“Mighty can settle. It will not be a problem as long as the company directly pays the BIR,” the official said.

Asked if the BIR would still file a tax evasion case against Mighty once it confirmed that it used fake tax stamps, the official said charges might be deferred in lieu of a compromise settlement. “Why would we kill a company that employs people?” the official added.

In a statement last Sunday, Finance Secretary Carlos G. Dominguez ordered the BIR as well as the Bureau of Customs “to file at the soonest the appropriate charges against persons and companies proven to be the owners of P2.2 billion worth of smuggled and counterfeit tobacco products, shoes and clothes that government agents seized in a series of raids since last week.”

“If the evidence warrants, I urge the BIR and BOC to file the appropriate charges in court as soon as possible,” Dominguez said.

Besides filing charges against unscrupulous firms, the DOF said Dominguez also wanted government officials in cahoots with the erring entities included in the charge sheets if they were found to have been involved in these tax evasion bids.

“They (the BOC and the BIR) should speed up their investigations and also look into the possible involvement of bureaucrats acting as protectors of these large-scale tax evasion attempts,” Dominguez said.

An industry source said that even as Mighty would settle its allegedly unpaid taxes, criminal liability should not be extinguished and the company must pay 10 times the excise value under the law.

The source noted that under Section 263 of the Tax Code, “any person who is found in possession of locally manufactured articles subject to excise tax, the tax on which have not been paid in accordance with law… shall be punished a fine of not less than 10 times the amount of the excise due on the articles found but not less than P500 and suffer imprisonment of not less than two years but not more than four years.”

Also under the Tax Code, manufacturers as well as owners of bonded warehouses found with products having unpaid excise taxes would also be fined 10 times the amount on top of imprisonment of 1-2 years. “The mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be punishable,” according to the Tax Code.

Last Sunday, the DOF quoted Customs Commissioner Nicanor E. Faeldon as saying in a report to Dominguez that the BOC last week confiscated P2 billion worth of smuggled and fake cigarettes, “including cigarette brands manufactured by Mighty that contained fake tax stamps.”

In all, the BOC and the BIR seized 11,044 master cases of Mighty cigarettes worth P215 million in market value in General Santos City on top of 62,200 master cases worth P1.98 billion in San Simon, Pampanga. The 73,244 master cases contained 36.622 million packs, which at an excise tax of P30 a pack will result into foregone revenues for the government totaling P1.1 billion.