BIR files P9.5-billion tax evasion case vs. Mighty Corp.

In this Mar. 8, 2017 file photo, Alexander Wongchuking (right), president of the Mighty Corp., arrives at the National Bureau of Investigation office in Manila with former NBI Deputy Director Reynaldo Esmeralda following the seizure of P2 billion worth of Mighty cigarette packs with fake tax stamps at the company’s warehouse in San Simon, Pampanga. — (PHOTO BY MARIANNE BERMUDEZ / INQUIRER)

Update

MANILA — The Bureau of Internal Revenue filed before the Department of Justice, on Wednesday, a P9.5-billion tax evasion case against homegrown cigarette manufacturer Mighty Corp. for allegedly using fake tax stamps to deprive the government of excise tax payments.

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 paid.

Nongovernment Action for Economic Reforms had pegged Mighty’s tax liabilities at about P15 billion, based on the volume of cigarette packs that bore fake stamps earlier confiscated by the BOC and the BIR in Zamboanga City, Pampanga, General Santos City, Cebu City and Tacloban City late last month and early this month.

Last week, Albay Rep. Joey Sarte Salceda told reporters that Mighty’s basic arrears could reach up to P25 billion, excluding interest and penalties for nonpayment of excise taxes.

In a statement, Mighty said it “welcomes the filing by the BIR of the complaint as it provides us an opportunity to clear our names and show we violated no tax laws.”

“We will continue to cooperate with government in its continuing effort at tax collection,” Mighty said.

Internal Revenue Commissioner Caesar R. Dulay had said that the proliferation of counterfeit cigarette tax stamps “definitely impact” on the collection of excise taxes.

Preliminary BIR data showed that total excise tax collections last year rose to P163.5 billion from P158.3 billion in 2015.

Despite the increase in the total excise tax take, collections from tobacco products declined to P91.6 billion in 2016 from 2015’s P99.5 billion. This was despite higher rates implemented last year than in 2015 under Republic Act No. 10351 or the Sin Tax Reform Law.

In January, the Inquirer first reported that the BIR was investigating Mighty as its products had been found bearing fake cigarette tax stamps.  SFM