Finance Secretary Carlos Dominguez III has given new marching orders to the heads of the Bureaus of Internal Revenue (BIR) and of Customs (BOC) to work closer together in catching more “big fish” that are cheating the government of billions of pesos in taxes following the government’s successful campaign against cigarette manufacturer Mighty Corporation, which resulted in the biggest tax haul ever from a single entity in the country’s history.
Dominguez’s directive came on the heels of President Duterte’s order in his second State-of-the-Nation Address (SONA) for the Department of Finance (DOF) and the BIR to accept Mighty Corp.’s settlement offer of P25 billion, representing its deficiency excise and income taxes, along with the voluntary shutdown of all its operations.
“You better line up another big one. Next year, if possible, catch somebody, another big fish,” Dominguez told BIR Commissioner Caesar Dulay and BOC Commisioner Nicanor Faeldon at the recent DOF executive committee meeting.
Later at a press briefing, Dominguez said: “People should pay attention to paying their taxes, because we are serious about doing it.”
“We are not out for publicity, like some other administration, we are out for big amounts. I mean, our time is limited so let’s go for the big ones,” he added.
Dominguez said another P20 billion or P30 billion would be “a good target” for the BIR and BOC to make in running after tax cheats.
The government’s total take from the Mighty Corp.’s settlement offer is expected to reach P30 billion, Dominguez said, owing to the value-added tax (VAT) to be paid from the sale of Mighty’s assets to Japan Tobacco International (JTI).
JTI, which will acquire Mighty’s assets and distribution network, has agreed to provide an interim loan to Mighty to pay off the latter’s tax liabilities.
Dominguez attributed the success of the government’s campaign against Mighty to the close coordination and exchange of information between Dulay and Faeldon.
“We all work as a team It’s not one or the other, it’s everybody together,” he said.
A manager’s check amounting to P3.44 billion, covering Mighty’s excise tax liabilities, was issued last July 20 by JTI and deposited at the SSS branch of the Land Bank of the Philippines in Quezon City. The amount represented the initial tranche of Mighty’s settlement offer.
The balance of P21.5 billion will be paid on or after the closing of the proposed deal with JTI, which needs to be cleared by the Philippine Competition Commission.
Earlier, Dominguez welcomed the President’s acceptance of Mighty’s offer and his SONA statement that the settlement “does not preclude other criminal charges” against Mighty that the BIR may decide to file against it.
Dominguez agreed with the President that the civil settlement will spare the government a long-drawn out court battle that could take years to resolve.
After three criminal complaints filed by the BIR against it for non-payment of excise taxes and possession of counterfeit cigarette tax stamps, Mighty has offered to shutter its business and settle its deficiency excise and income taxes.
In his SONA, President Duterte noted that the settlement of Mighty’s tax liabilities “will be the biggest settlement on record” that will “produce a windfall for the government, which is significant, since we have to face the unexpected costs of rebuilding Marawi and Ormoc.”
Mr. Duterte said the case of Mighty should serve as a “lesson to others” that his “administration will spare no one found cheating the government of its due.”
