media partner of the year
United nations
2015 environmental Media Award leadership award 2008
BusinessMirror
www.businessmirror.com.ph
A broader look at today’s business n
Saturday, April 1, 2017 Vol. 12 No. 171
2016 ejap journalism awards
business news source of the year
P25.00 nationwide | 2 sections 20 pages | 7 days a week
govt sets its sights on multibillion-peso suspected tax evaders in tobacco industry
All-out war against tax cheats
W
By Elijah Felice E. Rosales
hen reports broke out in Malacañang on March 6 that a businessman allegedly tried to bribe President Duterte to settle a legal dispute, reporters immediately went on the trail to find out who he was. message to big-time tax dodgers that the Duterte administration is dead set on putting an end to these nefarious activities and sending all of them behind bars.”
Clear message
This internal investigation of the government, which went alongside its scrutiny on the abuses of its police forces, looks like the beginning of the Duterte administration’s crusade against corruption. As what the finance chief said, it is now sending a message to tax cheaters to start packing up their bags or else, the government would not hesitate to bring them behind bars. So what’s the real score in Mighty Corp.’s recent tax-evasion case? It was in January that the BIR told a local newspaper it has been receiving reports of widespread use of fake tax stamps affixed on cigarette packs. The news report said industry sources point to Mighty Corp., since the counterfeits proliferated mostly in provinces where the Wongchuking-owned brand is leading market sales. The BIR, implementing the Internal Revenue Stamps Integrated System on tobacco products since 2014, is concerned with these fake tax stamps, because they cheat on the government’s collection of excise tax. “Our collection is affected, because they are supposed to pay,”
Nuvolanevicata | Dreamstime.com
They first asked Presidential Spokesman Ernesto C. Abella, who gave vague hints, rather than dropping a specific name. Then they asked Chief Presidential Legal Counsel Salvador S. Panelo, who provided the details, and even bravely disclosed the identity of the supposed bribe giver: It was Alexander Wongchuking, owner of local cigarette manufacturer Mighty Corp. “He was ordered arrested by the President because of economic sabotage. Marami siyang ginagawang [ilegal] saka ipinangangalandakan niyang nabibili niya ang lahat ng opisyales dito [He did many illegal activities. He even bragged he could buy any official in our country],” Panelo said in a news statement. The supposed arrest order from Duterte developed as Finance Secretary Carlos G. Dominguez III told the bureaus of Internal Revenue (BIR) and Customs (BOC) to gather evidence against “certain parties” to be submitted to the Department of Justice (DOJ). Dominguez made a strong statement afterward, echoing the President’s rhetoric to criminals: “The government needs to first establish strong evidence to pin down this cigarette manufacturer on such charges. We must make sure the charges stick, not only to haul the guilty parties [to jail], including their possible cohorts in the government, but to send a clear
BIR Commissioner Caesar E. Dulay was quoted as saying.
Mighty’s defense
“As a consequence of its acts and omissions, Mighty Corp., together with its responsible corporate officers, is liable to pay an estimated aggregate excise-tax liability in the total amount of P9.564 billion.” —BIR
In the local manufacturer’s defense, Mighty Corp. Executive Vice President Oscar P. Barrientos said the situation being portrayed by the local newspaper is strange, as it sounds like an orchestrated deception. “This situation is unusual and highly suspicious for Mighty Corp. to be at the receiving end, because our operation is transparent and closely monitored by revenue authorities, from sourcing of raw materials to manufacturing and withdrawals of cigarettes,” Barrientos argued.
He added the company’s operation is closely monitored by cameras required by the BIR itself. And why would anyone even doubt Mighty Corp’s compliance to the law when it spearheaded the campaign against the proliferation of fake tax stamps, Barrientos said. The local manufacturer’s vice president pointed out it is necessary, however, that should the BIR conduct its investigation, it should include multinational companies and their local partners, particularly those who are known for importing large quantities of raw materials without paying the correct taxes to the prejudice of local See “Tax cheats,” A2
Tit-for-tat battle of top closest allies of President Duterte in the House of Representatives
Alvarez holds on amid reported ouster plot
D
By Manuel T. Cayon
AVAO CITY—The management of the Floirendo-owned Tagum Agriculture Development Co. Inc. (Tadeco) has maintained that the joint-venture agreement (JVA) to maintain a banana plantation inside the penal farm in Davao del Norte since 1956 is “legal and advantageous to [the] government”. The Tadeco statement came after the scion of the Floirendo family, Davao del Norte Rep. Antonio R. Floirendo Jr., also belied the suspicion of House Speaker Pantaleon D. Alvarez that he was masterminding the move to oust the latter from his post. Last week Alvarez filed House Resolution 867 to investigate the “grossly disadvantageous” 25-year
“lease contract” signed by the Bureau of Corrections (BuCor) and Tadeco. In a statement issued on Wednesday, Floirendo corrected Alvarez, saying it was not a lease but rather a JVA. Alexander N. Valoria, president and CEO of the Antonio O. Floirendo Management and Investment Corp. (Anflocor), told the BusinessMirror on
PESO exchange rates n US 50.1940
Wednesday the operations of the agreement have been “above board” and were always upheld on several occasions that it has undergone review. “This joint-venture agreement has been reviewed several times, everytime a new administration takes over, or a new administrator of the Department of Justice or the Bureau of Corrections takes the helm of these agencies,” he said. And after each review, Tadeco said in the same statement that “the JVA has been reviewed, and found to be advantageous to the government numerous times by the Executive and the Legislative departments in past administrations.” “In fact, the most recent review in the 15th Congress in 2012 once again arrived at the same positive conclusion regarding the JVA and its benefits to the government. The Department of Justice, through its representative, Atty. Teresita Domingo, said during the congressional review that the JVA is actually above board,” the statement added. Valoria said that even former President Benigno S. Aquino III,
who was a senator then, “sat at the Blue Ribbon Committee reviewing this agreement”. Valoria said the agreement has always upheld its commitment to compensate inmates at the Davao Prison and Penal Farm (formerly called Davao Penal Colony, or Dapecol) minimum wage since it was started in 1956, when the former idle penal farm of 500 hectares was developed into an abaca plantation. Tadeco shifted to banana in 1969, and still retains the same provisions in the JVA. He said it would be the Dapecol management that would identify the “prisoners of good standing” to work in the banana plantation. Valoria said the BuCor, or the Dapecol, has a pool of 900 prisoner workers, “as part of the rehabilitation of the prisoners. The Dapecol usually fields about 600 prisoners in a day’s work. “Actually, this is the core of the agreement: To help the government in providing a good correctional and rehabilitation program
President Duterte and House Speaker Pantaleon D. Alvarez (right) attend a news conference in Malacañang on March 13. AP/Aaron Favila
See “Alvarez,” A2
n japan 0.4486 n UK 62.6070 n HK 6.4604 n CHINA 7.2865 n singapore 35.9042 n australia 38.3482 n EU 53.5921 n SAUDI arabia 13.3854
Source: BSP (31 March 2017 )