Telcos to settle three years of franchise tax

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Monday, February 3, 2014

TELECOMMUNICATION firms in Cebu City settled for three years worth of franchise taxes they owe the City Government.

Acting City Treasurer Diwa Cuevas told Sun.Star Cebu that Smart Communications had paid the City P27 million in December last year. It covered franchise taxes from 2012 to 2014.

Sun Cellular also paid P2 million worth of taxes.


Globe Telecom Inc., on the other hand, is yet to pay franchise taxes to the City. The firm owes P30 million, Cuevas said.

Cuevas said she already sent a demand letter to Globe in October last year and told them to settle their obligations by December.

Until now, however, Cuevas said her office is yet to receive any payments. Because of this, Cuevas said she will be sending a final demand letter to the said firm.

In her previous conversation with Globe officials, though, Cuevas said the firm has expressed willingness to settle its obligations with the City.

Earlier, these telecommunication firms contested the move of the City to collect franchise tax from them. They said they will not pay local franchise taxes because they are already paying franchise tax to the National Government.

However, the City prodded them to pay, adding that the Supreme Court (SC) already resolved the matter by issuing a favorable ruling to the government in the case of PLDT versus City of Davao.

The SC said telecommunication companies are not exempted from paying franchise taxes in their area of operations.

Mayor Michael Rama has also since insisted for the telecommunication firms to pay the City franchise taxes as he wants to stop what has been practiced in the previous administration where they just make a compromise payment.

Particularly in the case of Globe, they just have to deposit P7 million a year for three years from 2009 to 2011 without necessarily paying for real property taxes or franchise taxes.

The compromise agreement already expired in 2011.

Under the Cebu City Omnibus Tax Code, the franchise tax is computed as three-fourths of one percent of the company’s gross receipts.

Published in the Sun.Star Cebu newspaper on February 03, 2014.

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