Smart seeks exemption from paying local taxes

MANILA, Philippines – Leading telecommunications firm Smart Communications wants the House of Representatives to exempt it from paying local taxes, citing the 25-year franchise it gave to San Miguel Corp.-owned Bell Telecommunications containing such a privilege.

Ray Espinosa, head of regulatory affairs of PLDT (Smart’s mother company), along with fellow Smart executive lawyer Enrico Español, made this clear before the House committee on ways and means headed by Quirino Rep. Dakila Karlo Cua recently.

The appeal caught House Deputy Speakers Romero Quimbo and Raneo Abu by surprise. They said they were not aware of the franchise granted by the previous Congress to Bell Tel on July 27, 2015.

Bell Tel’s legislative franchise – valid until mid-2040 – was approved as Republic Act 10900.

Under House rules, tax incentives sought by companies should pass through the ways and means committee, which Quimbo headed in the past Congress. His fellow congressman from Marikina, now Mayor Marcy Teodoro, led the franchise committee then.

Batangas Rep. Abu said the anomaly surfaced when Smart, which was in the process of renewing its franchise this year, asked for tax incentives similar to that of Bell Tel during last week’s deliberations before the Cua committee. 

“Smart was invoking that they should be given the same tax privileges as those contained in Bell Tel’s franchise,” Quimbo said. “The members, including myself, were surprised to see that the franchise had been approved without passing through my committee.”

“It’s a requirement that all measures that contain tax provisions should pass through the (committee) on ways and means. And this did not. It effectively makes this tax privilege dubious and with deep legal infirmity. It violated basic procedures of our rules,” he said.

For his part, Abu said the provisions pertaining to revenues and incentives should have gone through Quimbo’s panel before their approval on third and final reading during the previous Congress.

“The approval of this franchise is highly irregular,” Abu said.

 It could not be known yet, however, if Globe Telecoms knew of Bell Tel’s local tax-free franchise or if it would follow Smart’s call for fair treatment, or as a matter of last resort, elevate the issue to the Supreme Court.

Quimbo has yet to respond if the House leadership would revoke Bell Tel’s franchise.

Bell Tel is owned by SMC whose top honchos are billionaire Eduardo Cojuangco Jr. and chief executive officer Ramon Ang.

It was supposed to operate in partnership with the Australian-based Telstra in a bid to boost mobile and data services in the country but the deal fell through.