CEBU, Philippines - The Cebu City government halted temporarily the final amortization payment of Filinvest Land Incorporated for its 10-hectare lot at the South Road Properties owing to unresolved tax issues.
FLI is supposed to pay P141.8 million to the city yesterday for the properties it acquired in 2009, but City Treasurer Diwa Cuevas refused to accept the payment.
The amount represents FLI’s last payment for the 10-hectare lot amounting to P1.6 billion at P15 per square meter. The property is currently being developed as II Corso, a lifestyle strip and shopping destination.
Cuevas did not accept the payment because the Bureau of Internal Revenue has yet to issue an opinion on whether or not the city government is taxable by two percent.
If taxed, FLI will only be paying the city P135 million, less the two percent withholding tax, which is equivalent to P7 million.
“We believe the government agencies are not subject to tax,” Cuevas said.
Cuevas, however, said they can’t blame FLI for taxing the city “being a corporation and subject to BIR’s penalty if dili sila mo-tax.”
On top of this, Cuevas found also a minor loophole in the final payment.
She said that based on city records, FLI should pay the different amount of P187,000 additional to the P141.8 million.
Cuevas said FLI should pay P135,225,720 as principal amount and P6,761,286 interest rate at five percent per annum, which is computed on a diminishing balance per annum.
“Sensiyo raman pud na nila. Wala gyod ma-coincide ang computation sa FLI and sa city kay taglahi ang amount though gamay ra ang difference,” she said, adding, that they will reconcile the amount. — (FREEMAN)