Makati lifts closure order vs Smart after ‘compromise’ over unpaid taxes

MANILA— PLDT Inc. said Friday the Makati City government has lifted the closure order against Smart Communications Inc. — the company’s wireless unit — after striking a “compromise agreement” on an ongoing tax case.

The settlement was reached after Smart submitted to the city government its accounting records corresponding to revenues generated within the territorial jurisdiction of Makati, PLDT said in a disclosure to the stock exchange. Smart is headquartered in Ayala Avenue.

The closure order stemmed from an examination launched by the Office of the City Treasurer in 2016, which found that Smart owed Makati City over P3.2 billion in franchise tax covering the period of January 2012 to December 2015.

The city government said it had asked Smart to submit a breakdown of revenues and business taxes paid in all branches nationwide, but the company had refused to present the documents.

Smart earlier said it has filed cases to resolve the tax dispute, which are still pending before the court. With the submission of documents requested by the city government, the company said it “remains committed to complying with Makati City’s local tax ordinances, and with relevant national laws”.

Smart's tax woes come months after its parent firm grappled with a P48-billion budget overspending that triggered a brutal sell-off of the company's stocks last December.

Analysts have said that while the closure order could cloud investor perceptions of the company, it would likely have a limited impact on PLDT’s actual operations and financials.