Undervaluation Allegation Hits Mighty Corp

Allegations of undervaluation against Mighty Corp are highly speculative and inconclusive, according to the Bureau and Internal Revenue (BIR) and Senate Tax Study and Research Office (STSRO).

In the Oversight Committee Hearing held last Oct. 22, 2014, the government offices which monitor the implementation of the R.A 10351 or the Sin Tax Law presented the achievements and developments in their offices.

During the hearing, Sen. Vicente Sotto III, prior to asking questions, showed a presentation on Mighty alleging undervaluation that he said came from the STSRO.
However, the information in said report is considered for further analysis and therefore, not accurate.

BIR Commissioner Kim Henares, who was in the hearing, opposed the STSRO data which includes the discredited information on alleged illicit tobacco trade furnished by the International Tax and Investment Centre (ITIC) and Oxford Economics, as inaccurate, incomplete and not validated.

She also added that these data were commissioned and biased that may have been paid by PMFTC and that cannot be a basis against MC.

Based on ITIC’s Web site, one of its key officials is also a ranking official of Philip Morris International.

Rep. Raneo Abu of Batangas’ 2nd District, vice chairperson of the House Ways and Means Committee and a ranking member of Joint Congressional Oversight Committee (JCOC), has also mentioned that if the data or the information were not validated and biased, the BIR, BoC and the NTA should coordinate and these offices should be the one to submit the accurate, validated and unbiased information to the oversight Committee.

Partially reported to the oversight committee were inconclusive findings from Mighty’s suppliers, Eastman Chemical Company and Celanese Corp.

In dismissing the allegations, the company’s executive vice president Ret. Judge Oscar P. Barrientos cited Article 10 of the World Trade Organization (WTO) General Agreement on Tariff and Trade.

Under WTO: “All information which is by nature confidential or which is provided on a confidential basis for the purposes of customs valuation shall be treated as strictly confidential by the authorities concerned who shall not disclose it without the specific permission of the person or government providing such information, except to the extent that it may be required to be disclosed in the context of judicial proceedings.”

“This is clearly a trial by publicity,” he said, adding that suppliers are not allowed to disclose the agreed value of the imported raw materials between the supplier and buyer until after the valuation is determined on a transaction value basis as required by the WTO, the Kyoto Convention and World Customs Organization, including adjustments to current inflation.

“Besides,” Barrientos said, “our records of tax liquidations with the Bureau of Customs are verifiable and Mighty has not been penalized for any wrongdoing.”

“It’s unfortunate that instead of just collating information for purposes of legislation, some sectors biased against Mighty have acted as inquisitor, prosecutor and judge rolled into one supposedly for the JCOC hearing on the review of the Sin Tax Law,” Barrientos pointed out.