Ty, Tan overcome tax tussles against Purisima, Henares
Taipans Lucio Tan and George Ty have won their littleknown tax battles with former BIR commissioner Kim Jacinto-Henares and finance secretary Cesar Purisima.
Ty’s Toyota Motors was being pursued by the Bureau of Internal Revenue for over P242 million in alleged royalty tax deficiency, while Tan’s Northern Tobacco Redrying Co. was being chased by the tax agency for P90 million in income tax.
According to court records, Henares rejected Toyota Motors’ defense that it was not liable for the P242 million royalty taxes in 2009 since its automotive imports from Japan and Thailand were covered by preferential tax treaties with those two countries.
Toyota appealed to Purisima, who in turn upheld Henares, as Toyota had been late in filing the application for tax treaty relief.
But the Court of Tax Appeals,
in a ruling released last week, said the finance department’s denial of the tax relief just because Toyota had failed to apply within the prescribed period “would impair the value of a tax treaty.”
“The obligation to comply with a tax treaty must take precedence over” additional BIR regulations, said CTA Associate Justices Juanito Castaneda Jr., Caesar Casanova and Catherine Manahan, citing a 2013 Supreme Court decision as they voted to overturn Purisima and Henares.
In Tan’s case, three other justices, — Lovell Bautista, Esperanza Fabon-Victorino and Ma. Belen RingpisLiban — rejected the P90 million tax imposition on a 2010 swap, where Northern Tobacco properties in Vigan, Ilocos Sur were exchanged for shares of stock of Fortune Landequities and Resources, another Tan company.
The tax appellate court ruled the property- share swap was a tax-free transaction, contrary to the BIR position that the exchange needed a prior certification from the tax agency to enjoy the tax benefit.
“There is nothing explicitly requiring a party, in exchanging property for shares of stocks, to first secure a BIR confirmatory certification or tax ruling before it can avail itself of tax exemption,” the tax court said.
Money talks
• New Land Bank president Alex Buenaventura has ordered the auction of Land Bank’s minimal stake in Philippine Airlines on March 13, instead of waiting for a planned re-IPO of PAL Holdings or until after the flag carrier shall have chosen a new foreign airline partner later this year.
It was not immediately clear if Buenaventura’s decision had been cleared with the Land Bank chairman, Finance Secretary Carlos Dominguez, who incidentally was a former PAL president.
• Retired Senator Manuel Villar Jr. was in Baguio for the Panagbenga weekend, meeting with his staff to discuss his property ventures in the region more than enjoying the annual flower festival itself.
• Lawyer Alonzo Ancheta has been elected an independent non-executive director of San Miguel Brewery Hong Kong.
Heard through the grapevine
After last week’s toxic political hearings, the Senate will thankfully devote this week to working on pressing economic legislation like the establishment of special education and mass transit system funds, the simplification of the estate tax and related tax reform proposals, the proposed amendments to the Bank Secrecy Act as well as another proposal for “rightsizing the national government.”