City owes BIR P1.2B in taxes
The Cebu City government’s unpaid tax obligation in 2010 has ballooned to P1.2 billion based on the latest tax assessment issued by the Bureau of Internal Revenue.
The city government’s failure to immediately settle the basic tax assessment amounting to P471 million is causing the government an additional P475 million in interest and P235.5 million in surcharges.
Cebu City Accountant Arlene Rentuza said they have already paid P53 million of the basic tax last August 8 and have asked the BIR for abatement to write off the interest and surcharges.
However, Rentuza said the city is required to pay 40 percent of the basic tax assessment which is equivalent to P188 million.
“Minimum requirement lang ang P188 million payment as a condition in the application for abatement of interest and surcharges,” she told The FREEMAN.
The P188 million was included in the proposed Supplemental Budget Number 3 now pending before the City Council. A public hearing was held yesterday. Lawyer Yedah Ylanan of the City Legal Office explained that the tax assessment was due to the taxable economic enterprises of the city government.
The taxable proprietary operations of the city includes rental of equipment, sports complex, condominium, social hall and function hall, sales revenue, sales of property, sale of government lots, among others.
Councilor Margarita Osmeña questioned why the city government failed to settle its obligation in 2010 that could prevented the hefty interests and surcharges. Rentuza explained that the city’s VAT registration with BIR came later in 2015.
“We are religiously finding our returns. We are not paying any income yet because there are also expenses that we are deducting from our income. Part of the supplemental motion that we filed in January, we were trying to tell BIR also that some of the income that they perceived that we are receiving are actually part of our regulatory functions,” she said.
Rentuza said that the city government and BIR officials are constantly communicating to address the problem. The city government is hopeful that BIR Commissioner Cesar Dulay will approve the application to abate the interests and surcharges.
If the abatement will be granted, Rentuza said the city government will have to pay only the remaining amount of the basic tax. But, Rentuza said this does not include the city’s tax liabilities for 2009 and 2015, which assessments are forthcoming.