No tax evasion on local franchise dispute with Makati: Smart

FILE: Facade of the Smart Flagship Store in SM Megamall, Mandaluyong City, Philippines (Photo by Elvinelvinelvin/Wikimedia Commons, CC BY-SA 4.0)

MANILA — No tax evasion was involved in the recent legal victory of the Makati City government against telecommunications firm Smart Communications, Inc., an official said.

Ramon Isberto, head of Smart’s Public Affairs, said in a statement released Tuesday that it was merely a dispute on the local government’s assessment of PHP3.246 billion for deficiency franchise taxes and fees for the years 2012 to 2015.

“This case stems from a dispute over the correct assessment of local franchise taxes (LFT) by the Makati City government. Contrary to some published reports, it does not involve tax evasion,” Isberto said.

He said the Court of Tax Appeals (CTA) has not decided on Smart’s LFT liability to Makati City but merely upheld a previous ruling granting the city’s motion for production of records and various documents of the company in connection with the main LFT case pending with the Makati Regional Trial Court (RTC).

In a 13-page decision on Feb. 5, the CTA’s Second Division through Associate Justice Jean Marie Bacorro-Villena denied for lack of merit Smart’s petition questioning the Makati RTC Branch 113’s resolution granting Makati City’s motion for production of corporate finance documents of the company.

In a resolution dated June 28 last year, the Makati court granted the city’s motion for the production of Smart’s corporate documents — which led to Smart bringing the case to the CTA.

The company claimed that allowing the Makati City government to inspect its finance documents is tantamount to permitting the city to a second audit in relation to its LFT payments for the years 2012 to 2015.

The Makati City government, on the other hand, claimed that the documents sought from the company were not confidential in nature to warrant non-production in court, stressing that the documents were made necessary by Smart’s failure to provide the city with a breakdown of gross sales/receipts of its branches.

The documents being sought include Smart’s general ledger, particularly the consolidated book for the years 2011 to 2014 and Makati branches and sales offices, sales book for the same period and cash register book, general journal book, application form and billing assessment from other LGUs, among several other financial documents.