Full collection of Mighty’s settlement offer depends on PCC approval

July 24, 2017

DAVAO CITY—The government’s full collection of Mighty Corporation’s civil settlement of its tax liabilities, which will amount to about P30 billion, will depend on how swiftly the Philippine Competition Commission (PCC) can approve the sale of the homegrown cigarette company’s assets to Japan Tobacco International (JTI), according to Finance Secretary Carlos Dominguez III. Dominguez said in a statement by the finance department on Monday Mighty’s offer to settle its tax liabilities for P25 billion will rise to around P30 billion once the value-added tax (VAT) and other fees are included in the computation of the final settlement sum. “This will be the largest sum of taxes collected ever from a single taxpayer in Philippine history. The date of full collection will depend on how fast the Philippine Competition Commission (PCC) approves the sale of Mighty's assets to the Japan Tobacco International (JTI) whose largest shareholder, incidentally, is the Japanese Government. Mighty will be out of the cigarette manufacturing business from now on,” said Dominguez in his weekend speech at the Davao Investment Conference held at the Lanang SMX Convention Center in this city. The PCC is an independent quasi-judicial body created by law to promote and maintain market competition and a level playing field for business by checking anti-competitive practices. Under Section 3 of the Implementing Rules and Regulations of the PCC, parties to any merger or acquisition (M&A) are required to notify and seek prior approval from the Commission if the value of the transaction exceeds P1 billion. The Bureau of Internal Revenue (BIR) has received the first tranche of Mighty’s settlement offer of P3.44 billion last July 20, Dominguez said. In an earlier press briefing in Manila, Dominguez stressed that receipt of this initial amount does not mean the government has formally accepted Mighty’s P25 billion offer. Dominguez pointed out that even if the government finally accepts the settlement, it does not preclude any criminal charges that the BIR may file against Mighty, “as criminal cases cannot be compromised.” DMS