Philippines: BIR to Scrutinize Tax Records of Cigarette-maker Mighty

Source from:  InterAksyon.com 06/04/2014

The Bureau of Internal Revenue (BIR) is looking into the tax records of Mighty Corp in light of discrepancies in the local cigarette manufacturer's import and export transactions.

"Mighty has a Customs bonded warehouse. When you have a Customs bonded warehouse, whatever raw materials you import, the presumption is it will also be exported. In the BOC's assessment, the imports and exports did not match," BIR Commissioner Kim Henares said, adding that the missing products were presumed to have entered the local market.

"So was it declared? We will have to look into that figure. We can work from there," Henares told reporters last week.

The Bureau of Customs earlier demanded P853 million in duties from Mighty for the importation of raw materials. The company has since settled the amount, but the BOC ordered the suspension of Mighty's Customs bonded warehouse (CBW) anyway.

The amount sought by the BOC was on top of the P4.421 billion in excise taxes that the Department of Finance (DOF) claimed was due the government.

According to a report it submitted to a Senate panel looking into the matter, BOC said Mighty's raw material imports increased up until 2010 without a corresponding increase in local production.

"Further, we found that for an importing company that is licensed to operate a CBW, it is highly irregular for Mighty Corp to make duty payments for unusually large volume of bonded raw materials that are supposed to be devoted to manufacturing and exportation of its finished products as authorized by its warehousing license. An initial check of the customs value used in the declaration in the covering import entries shows that the same may not be in accordance with the Transaction Value System," the BOC report read. Enditem