FPI urges Congress to probe cigarette firm’s biz practices

MANILA, Philippines - The Federation of Philippine Industries has renewed calls for Senate and Congress to look into alleged cases of tax evasion and smuggling by homegrown cigarette firm Mighty Corp.

FPI chairman Jesus Arranza urged the joint congressional oversight committee to hold another hearing to allow Mighty to answer serious allegations of fraud in its importation practices as cited in the report made by the Senate Tax Study and Research Office.

The report claimed that Mighty has been undervaluing the cost of tobacco and  imported raw materials to evade customs duties and import value added tax.

Mighty was also found to have imported huge volumes of tobacco leaf which it declared for import but were actually diverted to the domestic market without paying duties and taxes in violation of the Tariff and Customs Code.

Sec. 3611 of the Tariff and Customs Code imposes  a fine of five to eight times the revenue loss and imprisonment of two to eight years.

Arranza said the findings may constitute falsification of commercial documents punishable under the Revised Penal Code

“We believe the joint congressional oversight body should look deeper into this matter and make the necessary recommendations and this will also allow mighty to air its side,” Arranza said.

Philip Morris Fortune Tobacco Corp. has likewise reiterated its call for the government to take further serious action against Mighty given the massive   losses in foregone revenues.

“Every company should pay their fair share of taxes for the development of the nation. This is the resounding message,” PMFTC  president Paul Riley earlier said.

The government was estimated to have lost P15.6 billion in potential revenues last year as the consumption of illicit cigarettes nearly tripled to 17.1 billion.

PMFTC likewise pointed out that the STRSRO report is a compilation of official data and facts collected from multiple agencies including the Bureau of Internal Revenue, National Tobacco Administration, and the Department of Trade and Industry.

Mighty is subject of an investigation by  regulatory authorities on allegations of under-declaration of sales and tax evasion.

Its market share surged to more than 20 percent from only seven percent in 2012  by selling cigarette sticks at P1 each, way  cheaper than its major competitors and below its production cost.

PMFTC is  hopeful that the stamp tax project would address the issue of large scale revenue leakage in the industry.