GMA challenges Quezon City tax assessment

MANILA, Philippines - Broadcast giant GMA Network, Inc. (GMA) filed a petition for prohibition with the Quezon City regional trial court against city treasurer Edgar Villanueva, saying his tax assessment lacks legal basis.

In the notices of assessment issued by Villanueva last June 17, the city government imposed upon GMA taxes worth P823 million for “business tax as contractor” and P3.1 million for “dividends” based on actual sales from 2005 to 2010 plus surcharge and interest.  

In a statement, GMA said Villanueva has no authority to compel the network to pay the taxes.

GMA vice president for finance Ronnie Mastrili said GMA paid P266 million in local franchise tax from 2006 to 2010, and noted that the city government has awarded the network for its diligence in paying taxes.

According to lawyer Gener Asuncion, GMA is not legally liable to pay the contractor’s taxes because the network does not fall under the definition of “contractor” in either the Local Government Code or the Quezon City Revenue Code.

GMA said it does not produce or sell advertisements but merely broadcasts the advertisements produced by the advertising companies so the network is not covered by the definition of “contractor” for “advertising services.”

The network also said the city government cannot impose a business tax on the firm’s dividends because they are protected by the National Internal Revenue Code, which says that local government units have no authority to impose taxes on them, except for local transfer tax on real property.