The Quebec government is seeking a tax payment of 1.36 billion Canadian dollars (about 114.6 billion yen) from JTI-Macdonald Corp., the Canadian unit of Japan Tobacco Inc., for the unit's alleged role in tobacco smuggling from 1990 to 1998, JT officials said.
JT bought JTI-Macdonald from American tobacco maker R.J. Reynolds in 1999, one year after the alleged smuggling ended. JT will mount a "full defense" against the Quebec government's demand, the officials said.
Quebec has insisted that JT is responsible for the conduct of the Toronto-based firm because it is now under the control of JT, they said.
JTI-Macdonald said in a statement earlier this month that it is "assessing the potential implications of a notice of assessment issued by the Quebec Ministry of Revenue claiming payment of C$1.4 billion."
It also said the Quebec Ministry of Revenue's action is "extraordinary and all the more disturbing as it ignores the presumption of innocence while a vigorously contested proceeding, to which Revenue Quebec is a party, is before the Ontario Court of Justice."
"JTI-Macdonald Corp. will be presenting a full defense in the Ontario case dealing with matters concerning allegations from the 1990s," it said.
The company said it is studying the Quebec case "carefully and will take all necessary and appropriate measures to defend its lawful business."