SM seeks credit for excess tax

CEBU, Philippines - The SM Prime Holdings Incorporated has requested the city government for a tax credit amounting to P17.9 million representing the excess amount from the amusement taxes it has paid the city from September 2000 to June 2010.

Cecilia R. Patricio, Senior Vice President of SM Prime Holdings Incorporated, said the company has paid Cebu City a total of P26,930,181 for amusement taxes, which is equivalent to the gross income of SM Cinemas.

Patricio explained their amusement taxes should only be P8,941,986 or equivalent to 10 percent of SM’s gross revenue receipts from its movie business, as provided for under Republic Act 9640, which amended section 140 (a) of the Local Government Code.

Such amendment of the LGC that took effect only on September 2, 2009 provides for the reduction of amusement tax rate to not more than 10 percent of the gross receipts from admission fees.

The SM official said that an enabling ordinance of Cebu City or from any local government unit is not necessary for Republic Act 9640 to be implemented, as the new law does not require the same.

“The law itself is sufficient basis for the payment of the lower amusement tax rate and the legal force of its enactment is not diminished by the non-enactment of an enabling ordinance,” Patricio said.

The law then allows SM to claim for a tax credit of the excess amount amounting to P17,988,195.

The request is now pending before the City Council Committee on Laws for further study and review. Should the city grant the same, the amount may be charged to SM’s other tax obligations to Cebu City.

An amusement tax, which is equivalent to 30 percent of the gross income of the producers of any entertainment activities such as concerts, movies and other related events, is one of the sources of revenue for local government units. —(FREEMAN)