San Miguel Corp.’s airport project is likely not to benefit much from the income tax holidays (ITH) granted by the Board of Investments (BOI) where the project is registered.
This developed as contradictions in the tax provisions between the Corporate Recovery and Tax Incentives for Enterprises (CREATE) and the Aerocity franchise bill have been noted at the Senate which is tackling the Aerocity franchise bill.
Sen. Panfilo Lacson said
CREATE removes some fiscal incentives in additional income generating government ventures in exchange for lower corporate income taxes. Under the 50-year franchise bill, SMC would enjoy P38 billion in tax perks for the construction of the airport in the first 10 years.
The company would then enjoy tax privileges of P2 billion for every succeeding year in the next 40 years.
“What I am worried is (if the) airport franchise bill is passed into law ahead of CREATE bill, we might be facing a constitutional issue,” Lacson said.
Lacson, however, offered a remedy by making the franchise bill an exemption on the CREATE bill or delete and amend the “catch all provision”under CREATE (so the franchise bill will not be affected),” he added.
The franchise of San Miguel Aerocity Inc. has been approved on second reading in the Senate.
In a forum Wednesday, BOI managing head Ceferino Rodolfo said because of the huge capital requirement of the airport project, SMC might not be able to maximize the incentives provided by BOI.
In particular, the four-year ITH will only apply in the first four years of of commercial operation when is not expected to earn profits.
“What they will be able to take advantage of would be the duty- free importation of capital equipment,” Rodolfo said. — Raymond Africa and Irma Isip