CEBU, Philippines - Cebu City Mayor Michael Rama has tasked Cebu Investment Promotion Center (CIPC) head Joel Mari Yu to facilitate the accreditation of SM Prime Holding Inc. with the Philippine Export Zone Authority (PEZA) so the payment for taxes on the sale of the 30-hectare lot at the South Road Properties can be waived by the Bureau of Internal Revenue (BIR).
Rama made the announcement yesterday after a meeting with the SMPHI officials last Wednesday.
The mayor, through, refrained from disclosing to the media the details of their meeting, even the names of the SMPHI officials that he met.
The SMPHI officials had sent a letter to Rama informing him that they might be forced to transmit to the BIR their P105 million obligation to the City of Cebu for January 14, 2012 and a portion of the same amount due for April 14 to satisfy the city’s obligations to the BIR.
BIR Commissioner Kim Jacinto-Henares had denied the request of the City Treasurer’s Office to waive the payment of P197.2 million that represents the capital gains tax and expanded withholding tax out of the sale of the SRP lots amounting to P2.7 billion, payable in installment basis until 2013.
Vice Mayor Joy Augustus Young said he learned that the P197.2-million tax obligations of the city already reached close to a billion pesos after the unpaid account earned interest.
This prompted Councilor Edgardo Labella to sponsor a resolution, approved by the City Council last Wednesday, urging the mayor to make an immediate appeal on the decision of the BIR Commissioner.
In yesterday’s press conference, the mayor informed the media that he already signed the motion for reconsideration of the BIR Commissioner’s decision.
It is the city lawyers’ argument that the City Government is exempted from payment of taxes when it sold parcels of land at the SRP because the South Road Properties is accredited by the PEZA.
But BIR’s Jacinto-Henares explained that although the SRP is accredited by PEZA, the City cannot be exempted from the payment of taxes when it sold the SRP lots to SMPHI because SM is not PEZA-registered. Also, the BIR said, SM would use the property for commercial purposes.
Assistant City Treasurer Emma Villarete said that if ever PEZA will accredit SMPHI, the City can still collect taxes.
Villarete said the commercial activities at the giant mall of SM that is expected to be completed by 2014 will be subject to regular taxation, citing the situation of some establishments at the IT Park in Lahug where the city is collecting taxes from them.
“However, for those PEZA accredited, they only pay five percent of their gross income, where only two percent will go to the city and the other three percent will go to the National Government. (FREEMAN)