‘Biggest tax settlement on record’: Duterte accepts Mighty’s P25-B offer

(Updated, 6:46 p.m.) President Rodrigo Duterte has ordered two government agencies to accept a tobacco firm’s offer of tax settlement.

“I have directed DOF and BIR to accept Mighty’s offer of P25 billion to pay its tax liabilities,” Duterte said in his second State of the Nation Address (Sona) at the Batasang Pambansa Monday.

He said that after  Mighty  settled its tax liabilities, it would no longer be engaged in tobacco industry.

“This will be the biggest tax settlement on record. It will produce a windfall for government, which is significant, since we face the unexpected costs of rebuilding Marawi and Ormoc,” President Duterte said, referring to the two cities flattened by fighting between government forces and ISIS fighters as well as damaged by a recent earthquake, respectively.

But Duterte said “the acceptance of the tax settlement offer does not preclude other criminal charges against the company that the BIR may decide to file.”

The government decided to settle with Mighty as it wanted “to avoid a long court battle that, as we saw in previous cases, could take years to resolve,” Duterte explained.

“Let this be a lesson to others—this administration will spare no one found cheating the government of its due,” the President warned.

President Duterte said the DOF and the BIR were “strengthening tax administration and running after tax evaders.”

The BIR had filed before the Department of Justice three tax evasion cases against Mighty and its top executives for a total of P37.9 billion in unpaid excise taxes due to alleged use of fake tax stamps.

Last Friday, Finance Secretary Carlos G. Dominguez III said they expect to collect up to P30 billion, including value-added tax, from a potential settlement with Mighty.

The tax settlement amount will be funded by the P45-billion sale of Mighty’s assets and distribution network to Japan Tobacco International Philippines.

Last week, the DOF through the BIR accepted an initial P3.44-billion payment from Mighty and JTI Philippines.