SMPH pays 7th installment for property bought in SRP

CEBU, Philippines - The Cebu City government has received last Friday the seventh installment of the P2.7 billion property bought by SM Prime Holdings Incorporated at the South Road Properties.

Assistant city treasurer Emma Villarete said the SMPH paid P103,731,162 to the city following Mayor Michael Rama’s request in Manila to continue paying their obligation instead of remitting the amount to the Bureau of Internal Revenue.

Villarete said that SMPH is expected to make another installment on January 14 until the total amount is fully paid in 2013.

Rama earlier explained to SM officials in Manila that the city has a pending appeal on the BIR’s ruling to collect taxes from the sales of the SRP lots. According to Rama, it is unfair for the city if the SMPH will already stop paying to the city government and deposit their payment to the BIR instead.

The SM officials earlier decided to withhold its quarterly installment to the city and give the money instead to the BIR until the city government can secure tax exemption on the sale of the 30.4-hectare property in the SRP.

SM officials accompanied Rama to the office of BIR Commissioner Kim Jacinto-Henares where the mayor tried his best to convince the official that the city is exempted from paying taxes out of the sales of the SRP lots because the area is accredited by the Philippine Economic Zone Authority (PEZA).

Henares ordered Rama to submit proof that the city is in deed tax exempt and is not obliged to pay the P837 million tax due.

City officials argued that the BIR cannot collect taxes from the PEZA accredited properties as provided for under the Special Economic Zone Act. The law provides that in lieu of taxes, the city government will remit three percent of the SRP’s income to the national government.

SM is planning to build a giant mall and a state-of-the-art world convention center on the property it bought from the city.    - (THE FREEMAN)