Gov’t counts on Mighty assets to cover tax due

The government may sell the assets of homegrown cigarette manufacturer Mighty Corp. if it could not cough up the unpaid taxes and penalties to be slapped if found guilty of tax evasion, Finance Secretary Carlos G. Dominguez III said.

On the sidelines of the Asian Development Bank’s 50th annual meeting last week, Dominguez said the Department of Finance would not care if Mighty’s owners, the Wongchuking family, would sell the firm just so it could pay its obligations to the government.

If Mighty could not pay the full amount, the government may take over the company and sell it to interested investors, Dominguez said.

Industry sources claimed rivals PMFTC Inc., British American Tobacco (BAT) Philippines and Japan Tobacco International (JTI) Philippines seemed interested in Mighty, particularly its distribution network.

Dominguez said that on top of the P9.6 billion tax evasion case filed against Mighty in March for allegedly using fake tax stamps, the company’s tax obligations from the other raids conducted in its facilities would jump to up to P30 billion, with two more tax evasion cases expected to be filed next week, he said.

Last month, Dominguez said the looming closure of Mighty’s manufacturing facility that would leave about 7,000 people jobless should be blamed not on the government but on the company itself for not paying the correct taxes.

“The BIR has been very responsible. Its main responsibility is to the Filipino people and I think they (BIR people) have acted with total responsibility,” Dominguez earlier told reporters when sought for comment on Mighty’s recent statement that the Bureau of Internal Revenue must “act more responsibly in making statements” and “take into consideration the repercussions of the cancellation of the license of the company.”

Mighty executive vice president Oscar Barrientos said about 7,000 employees and 55,000 tobacco farmers would be affected by the possible cancellation of its license to operate.

Internal Revenue Commissioner Caesar R. Dulay said it was looking at closing down the manufacturing facilities of homegrown cigarette manufacturer Mighty by next month to penalize the company for allegedly evading tax payments through the use of fake tax stamps.

“The BIR should consider that this case impacts on Mighty’s employees, tobacco farmers and their families, as well as suppliers and distributors who depend on the company,” Barrientos said.

But Dominguez said the BIR should not be faulted for any job losses if ever Mighty’s license to operate would be canceled.

“It is your responsibility. And you have a responsibility to your stakeholders. You are a private company, and one of your obligations is to make sure your stakeholders are safe,” Dominguez said.

As for the farmers to be affected, Dominguez said they “will always sell tobacco to somebody else—there will always be buyers and I am sure somebody will always cover that market.”

Dulay said the BIR was preparing to file three to five more cases against Mighty for alleged unlawful possession of counterfeit cigarette tax stamps.

Since late 2014, the BIR has been implementing the Internal Revenue Stamps Integrated System on tobacco products. These stamps ensure that the correct excise taxes are being paid.