Although the issue involving a Manila city ordinance exempting Smart Telecommunications Inc. from local taxes has yet to be resolved by the Department of Justice (DoJ), the telecommunications giant has gone ahead and paid nearly P40 million in retroactive taxes.
City treasurer Vicky Valientes confirmed that Smart had paid P39,903,215.68, or nearly P40 million, to the city government at the end of July, as payment for retroactive real-property taxes for equipment installed in the city in the past decade.
The equipment consists of microwave radios, antenna discs, rectifiers, feeders, air-con units, BTS equipment and generator sets.
Permits
Telecoms companies had not been paying local taxes to Manila until a city council inquiry in March prompted them to secure permits before building cell sites.
In April, however, the city council exempted Smart from paying the taxes through an ordinance, which did not have the approval of Manila Mayor Alfred Lim.
Ordinance No. 8229, passed in April 26 while Lim was in the United States, exempted Smart Communications Inc. from real-property taxes on all machinery and equipment and the local franchise tax.
Through city legal officer Renato de la Cruz, Lim filed an appeal before the DoJ in May to declare the ordinance unconstitutional.
The DoJ has yet to issue a decision on the matter.
Assessment
While the legal battle over the ordinance is pending, Lim, nevertheless, ordered the City Treasurer’s Office to make an assessment of the taxes the telecommunications firm needs to pay for the towers and satellites built in the city over the years.
The office drafted a tax declaration and issued a demand letter to the company on July 15. Smart paid up on July 28.
In an earlier interview, De la Cruz said Lim would disregard the ordinance and would continue to ask Smart to pay the local taxes.
De la Cruz added that the ordinance was against the Local Government Code, and that it was ironic to grant tax exemptions when the city was in dire need of funds.