DOJ grants BIR plea to withdraw tax raps vs. Mighty Corp.

The Department of Justice (DOJ) has granted the plea of the Bureau of Internal Revenue (BIR) to withdraw the tax evasion complaints filed against Mighty Corp. that was recently acquired by international cigarette giant Japan Tobacco Inc. (JTI).

“The cases were withdrawn upon motion of BIR because they arrived at a compromise with Mighty. That is legal and allowed under our tax laws,” Justice Secretary Vitaliano Aguirre II told GMA News Online on Friday.

The BIR filed with the DOJ panel of prosecutors a motion to withdraw the three tax complaints on September 26.

The tax agency cited Section 204 of the National Internal Revenue Code (NIRC) of 1997, which authorizes the commissioner to enter into compromise agreements as well as abate, refund and credit taxes.

The DOJ, in turn, granted BIR’s request on October 2.

"In view of the fact that the NIRC recognizes the authority of the Commissioner of the Bureau of Internal Revenue to compromise, abate and refund or credit taxes, and to compromise criminal violations except those already filed in court or those involving fraud, and considering further, that the parties to the instant are not opposed to the prayer for the withdrawal of the complaints, it behooves this Office to grant the motion if only to promote greater interest of the parties involved," the joint resolution stated.

The complaints cover the company's non-payment of excise taxes due its cigarette products and use of counterfeit tax stamps on its cigarette packs, which correspond to excise taxes valued by the BIR at a combined P37.88 billion.

Mighty Corp. tried to fight the complaints only to settle for a compromise agreement with the government after the homegrown tobacco manufacturer owned by Alexander Wongchuking decided to sell its assets to JTI.

Last month, JTI announced the completion of the acquisition of Mighty’s assets valued at P46.8 billion or approximately $936 million.

The announcement came after the Philippine Competition Commission approved the transaction as it found that the buyout will not likely have anti-competitive effects in the market. —KG, GMA News