RP won’t earn a centavo from sale of Mirant

The Philippine government will not earn a single centavo from the sale of Mirant Philippines should the transaction push through, a ranking Mirant official admitted during a legislative inquiry conducted by the House of Representatives yesterday.

"The result of the plan, if carried through, will be that no Philippine taxes will be due on the stake of the non-Philippine holding company," Mirant Philippines president and CEO Jose Leviste Jr. said.

Leviste explained before members of the House ways and means and energy committees which conducted the joint inquiry that since the owner of the Philippine companies will "remain the same, and only the identity of the ultimate owner will change," no taxes need to be paid the Philippine government. The committees were chaired by Congressmen Herminio Teves and Alipio Badelles, respectively.

According to Leviste, in implementing the divestment plan, parent company US-based Mirant Corp. proposes to sell the same Hong Kong based holding company that it bought from Hopewell Holdings and through which Mirant Corp. holds all its Philippine interests.

Earlier, Albay Rep. Joey Salceda assailed the proposed sale structure of Mirant Philippines, pointing out that selling off the Philippine assets at the off-shore level will deprive government of an estimated P 31 billion in various taxes.

Leviste said that the planned sale is in its "initial stages" and that negotiations with the eventual buyer may result in a different transaction from that proposed, in which case a different set of tax rules may apply.

Industry sources, however, point out that the sale process is being delayed by a relationship problem Mirant is having with energy officials and the legislature.

"There is clearly a break-down of relations which is hampering the divestment. This is clear in the National Power Corp.’s re-asserting its P1.35-billion reimbursement claim while invoking its right of prior consent to the sale. Add to this the legislative inquiries being called by no less than the President’s chief economic adviser. Evidently, a problem in managing relations with government is jeopardizing the process," sources said.

In his statement before the inquiry, Leviste said Mirant Philippines has paid a total of P24 billion in taxes since it started operations in the country.

Of this, some P22.5 billion accounted for internal revenue taxes and P1.55 billion as local taxes, as he denied that the company is selling its Philippine companies to "avoid real estate taxes imposed on its Philippine plants."