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Monday, May 30, 2005
John Hay asked to pay P72M in back taxes
BAGUIO CITY -- Camp John Hay Development Corporation is being asked to pay P71.98 million in import duties or face legal actions.
Customs district collector Edward Baltazar said "all importations of (John Hay) have lost duty and tax exemption privileges earlier accorded by Presidential Proclamation 420."
As a consequence, the customs office is asking the corporation to settle its liability in import duties amounting to P71,983,753. The amount represented taxes due on all imports made by the company from 1998 to 2004, Baltazar said in his letter to the corporation dated May 26.
He requested John Hay to settle the amount within 15 days or the bureau will be constrained to take necessary legal actions against the corporation.
The customs assessment comes in the heels of the Bureau of Internal Revenue's (BIR) denial of the developer's request for authority to print non-VAT receipts and invoices, saying that John Hay has become an ordinary corporation subject to the regular corporate income tax and value-added tax imposed under the Tax Code of 1997.
Customs and the tax bureau cited the March 29, 2005 resolution and the October 24, 2003 decision of the Supreme Court (SC), which nullified the John Hay SEZ tax and duty exemptions in accordance with Presidential Proclamation 420, as basis for their action.
"This only proves that we are not hiding behind the SC ruling. The impact of the SC decision is immediate and real. This clearly shows a material breach of Bases Conversion Development Authority's (BCDA) warranty on the 5 percent of gross income earned incentive embodied in Article XVI, Section 18 of the lease agreement," said lawyer Georgina Alvarez, senior vice president for Camp John Hay Development Corporation legal and corporate services.
"With this mounting tax problem, the bases authority can rest assured that John Hay will seek indemnification. We will pursue all legal steps to protect our rights as spelled out in our lease agreement," she added.
The same SC decision urged the City Treasurer's Office to assess John Hay with some P101.93 million in real estate taxes since the developer took over the 246-hectare Camp John Hay property in 1996.
The John Hay SEZ tax and duty exemptions were a guaranteed enticement by the bases authority when it invited the private developer to bid for the development of John Hay. It was spelled out in the lease agreement inked by the parties.
"The BCDA has accused us of employing `scare tactics'. Isn't it more frightening when the business sector, including the public in general, could not count on the government to honor its word? And isn't it the mother of all scares when, after failing to honor its word, the government threatens an illegal takeover?" Alvarez said.
(May 30, 2005 issue)
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