Mayor, legal office, COA asked to comment on SM tax credit request

CEBU, Philippines - City legislators have deemed it appropriate to seek the opinion of Mayor Michael Rama, the city’s legal office, and the Commission on Audit (COA) on the request of SM Prime Holdings Inc. for a tax credit amounting to P17.9 million.

The City Council adopted the recommendation of the committee on budget of finance headed by Councilor Margot Osmeña during its regular session held in Barangay Bonbon last Wednesday. The committee made the recommendation after reviewing the request of Cecilia R. Patricio, senior vice president of SM Prime Holdings Inc.

Patricio said earlier that SM Prime Holdings Inc. had paid Cebu City a total of P26,930,181 in amusement taxes, which is equivalent to 30 percent of 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 what Republic Act 9640 provides when it amended section 140 (a) of the Local Government Code.

The new law that took effect last September 2, 2009 provides for the reduction of amusement tax rate to not more than 10 percent of the gross receipts from admission fees.

It prompted the SM officials to ask the city to have the P17,988,195 supposed excess in its amusement tax payment applied as credit for its future tax obligations.

The SM official said 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 city had collected amusement taxes, 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)