CEBU, Philippines - Cebu City Mayor Michael Rama once again told officials of SM Prime Holdings Inc. that they should pay P109 million due to the city next month as installment for the 30.4 hectares that it bought at the South Road Properties and not give it to the Bureau of Internal Revenue (BIR).
Rama said he explained to the officials of SM Prime Holdings Inc. that the city’s appeal to the BIR about its ruling to collect capital gains tax and other kinds of taxes from the city is still pending and SM should continue to pay its obligation to the city.
SMPH wrote Rama that it will be forced to withhold its quarterly installment to the city next month and to remit the amount to the BIR if the city cannot get the exemption.
The mayor flew to Manila yesterday and met with Cecilia Patricio, SMPH vice president for corporate tax division.
During the meeting, Ronald Tumao, the vice president for marketing; Edgar Ryan San Juan, vice president for legal; Armenia Ballesteros, assistant vice president for business planning and John Itoh, head of corporate tax division were also present.
Rama said the SMPH officials accompanied him to the office of Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares where he tried his best to explain to her why the city is not obliged to pay taxes for the sale of the SRP lots.
But Henares asked Rama to support his claim that the city is exempted from the payment of any taxes for the sale of SRP lots just because the SRP is accredited with the Philippine Economic Zone Authority (PEZA).
Rama refused to give a categorical answer when The FREEMAN asked him, in phone interview, of what will be his next move if SM officials will not comply with his request to continue paying the installment payment to the city.
SMPH, the owner of SM City Mall, had purchased 30.4 hectares of land at the SRP which is situated near the Mambaling exit at P2.7 billion payable on installment basis until 2013.
If SM Prime Holdings Inc. will not remit its quarterly obligations to Cebu City, the city may lose over P200 million for their installment payments this year.
Yesterday’s meeting between Rama and Henares was the third.
The city’s tax obligations to BIR has reportedly reached P837 million.
Councilor Jose Daluz III, who used to head the City Council’s committee on budget and finance, argued that the BIR cannot collect taxes from the city considering that it is a local government unit and the SRP is accredited with PEZA.
Daluz said the Special Economic Zone Act provides that in lieu of taxes, the city will just remit three percent of the SRP’s income to the national government.
Cebu City South District Rep. Tomas R. Osmeña said he can solve the problem, although he has decided to give Rama a chance to first solve it. –/NLQ (FREEMAN)