Lobbying for SRP tax breaks hits snag

CEBU City Hall’s lobbying to secure a tax exemption for lot sales in the South Road Properties (SRP) hit a snag following a meeting between Mayor Michael Rama and the Bureau of Internal Revenue (BIR)’s top official.

Rama said BIR Commissioner Kim Jacinto-Henares told him that a “lot of things need to be worked on” to resolve the city’s appeal.

He said Henares remained undecided on the city’s appeal to consider  the SRP  an economic zone entitled to  tax exemptions.

Rama said the BIR official  wanted some requirements complied by the city before she reviews the appeal anew.

The mayor left for Manila last Tuesday to meet with officials of SM Prime Holdings.

SM Prime Holdings earlier wrote city officials to inform them that SM would pay its  amortization to the BIR, instead of Cebu City, starting next month for the   30-hectare property acquired in the SRP. The group later met with Henares.

BIR’s Cebu City South office sent a preliminary collection notice to the Cebu City government asking the city to pay over P800 million in deficiency value added tax, expanded withholding tax and documentary stamp tax for  its  transactions  with Filinvest and SM Prime Holdings Inc.

As developer and operator of the SRP,  Cebu City is liable to pay taxes that represents 5 percent of every installment  payment made, said the BIR.

Councilor Jose Daluz said the city should secure the tax exemption before the month ends to prevent payment of SM amortization to BIR.

Daluz said it would  be difficult for the city government to recover the money once it is paid to BIR. Chief of Reporters Doris C. Bongcac