Expect the Duterte administration to go after more big fish who evade tax payments, as the government is hard-pressed to look for more money to be spent on the reconstruction and rehabilitation of war-torn Marawi City, the Department of Finance said Friday.
“Our target are the guys who don’t pay their taxes, whether they’re a corporation or affluent individuals,” Finance Secretary Carlos G. Dominguez III said in a statement, adding that they wanted to catch tax evaders that would “yield the most gain for the government.”
“Just like Mighty Corp., that’s where we put our effort. Of course, the ones where the yields are higher,” Dominguez said.
Early this year, Mighty cigarettes were 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 Japan Tobacco International.
In all, JTI will pay the government a total of P30 billion—P25 billion for the tax settlement on top of P5 billion in value-added tax—until April next year.
Following the settlement, the Department of Justice last month dismissed the tax evasion cases against Mighty owner Alexander Wongchuking, president Edilberto Adan, executive vice president Oscar Barrientos and treasurer Ernesto Victa.
In a recent forum, Finance Undersecretary Gil S. Beltran said that the government was “trying to mobilize more resources for Marawi, and we are looking at tax administration; for instance. we will look for more big fish aside from Mighty.”
“In the case of Mighty, it will bring us P4 billion in additional revenues every month,” Beltran noted.
But Dominguez clarified that the government will not necessarily target affluent personalities as well as big companies just because they were rich.
“First of all, we have to have good evidence that they are cheating on the tax. It’s not just because you’re rich, we’ll go after you. That’s not fair also,” Dominguez said.
“If there’s evidence that you haven’t paid your tax—for instance, we conduct a raid on the company and we see that there are a lot of untaxed goods, of course, we will go after that. So it’s a lot of forensic investigation, forensic accounting, looking at the industry, benchmarking, how come this guy has this percent of the market and pays only so much,” according to Dominguez.