Mighty Corporation Denies Tax Fraud and Smuggling Allegations

Mighty Corporation's legal counsel, Miguelito Ocampo, categorically denied allegations that the company had underdeclared its production to avoid huge tax dues. At the same time, he stressed that the sales of P1 per stick of Mighty cigarettes was not a result of such an illegal scheme.

Mighty Corporation Denies Tax Fraud and Smuggling Allegations

“While our company cannot comment on how other cigarette companies price their cigarettes, what we can say is that our company can sell P1 per stick because aside from having comparatively lower administrative and operating expenses, Mighty does not pay royalty fees to foreign companies for the use of our brands of cigarettes,” Ocampo said.

Competitors with foreign brands have to pay royalties to their mother companies which adds up to the retail prices of their products, the lawyer explained.

“Mighty also does not pay service fees or management fees to any foreign company,” Ocampo said, stressing that the Filipino-owned cigarette manufacturing firm uses more local components and inputs rather than import most of them.

“Finally, it might interest the public to know that Mighty is not the only company that currently sells P1 per stick cigarettes,” the lawyer further said.

Ocampo said reports that the company is being investigated for tax evasion by the Bureau of Internal Revenue could be the handiwork of its rivals from whom Mighty took a substantial industry share.

When Republic Act 10351 or the Sin Tax Law was passed, it paved the way for the re-entry of players such as Mighty Corp. in the low-cost cigarette field. Since the law caused the prices of medium and high-end brand cigarettes to soar, it opened up opportunities for low-priced cigarettes to rule the market.

Many smokers shifted to the cheaper brands because they could get five sticks of inexpensive cigarettes for the price of one branded cigarette such as Philip Morris.

It was estimated that 25% of premium and sub-premium smokers have switched to cheaper brands like Mighty. The rest have stayed with their favored brands, at the same time attempting to reduce their consumption.