Mighty making P3.5-B initial payment to government

MANILA, Philippines -  The government has agreed to accept the initial payment of P3.5 billion from Mighty Corp. as the company takes steps to complete the sale of its business and assets to Japan Tobacco International (JTI) Philippines Inc.

In a statement, Finance Secretary Carlos Dominguez said the DOF was informed that a manager’s check amounting to P3.44 billion was issued by JTI Philippines and deposited yesterday at the Land Bank of the Philippines’ branch at the Social Security System compound in Quezon City.

“We will accept the initial payment,” Dominguez said.

However, Dominguez stressed the acceptance of the initial payment does not mean the government has agreed with the P25 billion settlement offer made by Mighty to cover all its tax liabilities.

The finance chief reiterated that the criminal charges filed by the Bureau of Internal Revenue against Mighty Corp. would not be dismissed even if the government accepts the offer, as the charges cannot be compromised.

Earlier, Mighty Corp. president and director Oscar Barrientos, in a letter to BIR commissioner Caesar Dulay, offered to settle the company’s tax liabilities for P25 billion, which will be funded by an interim loan, as well as the proceeds from the sale to JTI Philippines amounting to P45 billion.

“The initial payment of P3.5 billion will be paid by the company (JTI) on the company’s (Mighty’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,” Barrientos said.

Barrientos said the balance of P21.5 billion would be paid on or after Mighty has closed its deal with JTI.

JTI Philippines, in a statement, also confirmed the ongoing talks with Mighty Corp.

The BIR has so far filed three tax evasion cases against Mighty Corp. due to alleged non-payment of excise taxes and the use of counterfeit tax stamps, which correspond to a combined tax liability assessment of P37.88 billion.

Barrientos had requested the BIR to reinvestigate the cases following the initial payment of P3.5 billion.

“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.