Philippine tobacco giant pays $586 million to settle tax case

The Philippine government had accused Mighty Corp. of using counterfeit tax stamps to avoid paying 37.88 billion pesos in taxes, and threatened it with criminal charges. (Reuters)
Updated 06 October 2017
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Philippine tobacco giant pays $586 million to settle tax case

MANILA: The Philippines said Friday it has dropped a tax evasion case against the country’s number-two cigarette manufacturer after it was sold to Japan Tobacco to raise funds for a record 30 billion-peso (SR220.8 million) settlement.
Manila had accused Mighty Corp. of using counterfeit tax stamps to avoid paying 37.88 billion pesos in taxes, and threatened it with criminal charges.
However in July, President Rodrigo Duterte ordered the finance department to accept a settlement, under which Mighty, which has 23 percent of the local cigarette market, would drop out of the tobacco business.
“We could consider this case as closed. (The) government of the Philippines is 40 billion pesos richer,” Justice Secretary Vitaliano Aguirre told reporters.
The company settled the case with a 30-billion-peso payment, and paid another 10 billion pesos in taxes and penalties, he explained.
Mighty had originally offered a 25-billion-peso settlement, Aguirre added.
The company sold off its assets to Japan Tobacco International in order to meet its tax deficiencies, the finance department said earlier.
The Japanese firm, one of the world’s biggest tobacco companies, whose global brands include Winston and Camel, announced on August 22 that it was purchasing Mighty for 46.8 billion pesos.
Asked to comment on the justice department decision, a Japan Tobacco spokesman in Japan said “the tax liability is an issue that should be solved appropriately between Mighty Corp. and the Philippine government.”


Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

Updated 20 min 10 sec ago
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Saudi Real Estate Refinance Co. plans up to $1.07bn sukuk sale this year

  • The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios
  • SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year

RIYADH: Saudi Real Estate Refinance Co. (SRC), modelled on US mortgage finance firm Fannie Mae, aims to issue up to 4 billion riyals ($1.07 billion) of long-term sukuk this year, its chief executive said on Tuesday.

The plan by SRC, a subsidiary of Saudi Arabia’s sovereign Public Investment Fund, comes as it prepares to purchase more home loan portfolios from mortgage financing companies and banks to boost the Kingdom’s secondary mortgage market.

SRC, formed in 2017, is also keen to tap foreign institutional investors for its debt sale this year, Fabrice Susini told Reuters in an interview.

“Our strategy is clearly to tap the market twice this year,” he said. “We are really looking at probably issuing something between ... 2 and 4 billion riyal that we may be issuing in two tranches.

He said SRC was looking at sukuk in the 10 to 15-year range, to help minimize refinancing risks. “Generally speaking we are trying to issue as long as possible,” Susini said.

He said the company was assessing whether it could also issue bonds in currencies other than the local riyal.

In March, SRC completed a 750 million riyal sukuk issue with multiple tenors, under a program that allows it to issue up to 11 billion riyals of local currency denominated Islamic bonds.

“The rule of the game for us is, like many projects across the Kingdom, attract liquidity from foreign investors,” Susini said.

He said SRC had spent 1.2 billion riyals from its balance sheet buying mortgages from local mortgage financing companies and provided liquidity to these firms.

It has also signed initial accords with several commercial banks to acquire housing mortgage portfolios.

Saudi Arabia’s housing ministry is targeting the mortgage market to reach a total value of 502 billion riyals by 2020 from around 300 billion riyals now.

The government wants to increase activity in the real estate market as it moves to revitalize the economy and is taking steps to reform the sector as part of its 2030 reform plan.

It has been working with developers and local banks to counter a shortage of affordable housing — one of the country’s biggest social and economic problems. Saudi Arabia wants 60 percent of its nationals to own homes by 2020, up from 47 percent in 2016.

The size of real estate financing relative to its gross domestic product is 5 percent in Saudi Arabia compared to 69 percent in the United States, 74 percent in the United Kingdom and 43 pct in Canada, the housing ministry has said.

“The goal of SRC in this market was to make sure that we will be able to refinance at least around 10 percent of the market in 2020, and 20 percent of the market by 2028,” Susini told Reuters.