JTI commits to grow PH operations – DOF

Global cigarette giant Japan Tobacco Inc. (JTI) has committed to expand its Philippine operations in line with its recent acquisition of homegrown brand Mighty, the Department of Finance (DOF) said.

In the recent visit of President Rodrigo Duterte to Japan, DOF Secretary Carlos G. Dominguez III and JTI president and chief executive Mitsuomi Koizumi signed a letter of intent, under which the company pledged to “continue expanding its affiliates’ presence in the cigarette market in the Philippines.”

The DOF quoted Koizumi as saying that the company’s almost $1-billion or P46.8-billion investment “underlines its intent to consolidate and expand its presence in one of Asia’s robust economies and enhance its business base in the Asean, with the Philippines serving as its regional hub.”

“The reason for the investment is two-fold: The transaction enables [JTI] to consolidate its business foundation through expanded distribution and strengthened brand portfolio by providing [JTI] with more than a quarter of market share in a country with robust economic growth and the transaction allows [JTI] to enhance its business base in the Asean region with the Philippines serving as its regional hub,” the company said in the letter of intent.

“[JTI] enthusiastically supports DOF in its tax collection effectiveness program, and enthusiastically supports the realization of DOF goals to enhance the Philippines’ revenue base to bring about inclusive growth,” the letter of intent also stated.

Likewise, the DOF quoted JTI as saying that it will “continue to support the economic growth of the Philippines with contributions to infrastructure and human resource development, and help create more jobs in the country while fully complying with government regulations and promoting the welfare of the Filipino people through responsible corporate governance programs.”

In September, JTI announced that it already completed its acquisition of Mighty’s assets, paving the way for the full payment of P30 billion to the government –P25 billion for the tax settlement on top of P5 billion in value-added tax – until April 2018.

Early this 2017, Mighty cigarettes had been found bearing fake cigarette tax stamps to evade excise tax payments, such that the government slapped the homegrown manufacturer three tax evasion cases worth a total of nearly P38 billion.

The government eventually decided to settle with Mighty, under which the Bulacan-based company had to sell P46.8 billion in assets to JTI.

In July, JTI’s Philippine unit remitted P3.4 billion to the BIR as part of the tax settlement.

An additional P12.1 billion was received by the BIR from JTI last September, after the firm sealed the deal and absorbed Mighty.

In all, JTI would pay the government a total of P30 billion in three installments – P5.8 billion in October; P8.5 billion in November; and P500 million in April 2018. /kga