Mindanao Times

MOA to settle firm’s tax issues


THE city council passed on first reading a proposal for the crafting of a memorandum of agreement (MOA) that will settle the issues of how to divide taxes of the Therma South Inc. between the city government and the government of Sta. Cruz, Davao del Sur.

The proposal was referred to the committee on finance, ways and means, and appropriat­ions chaired by Councilor Danilo Dayanghira­ng last Tuesday during the regular session.

This developed as the company, a subsidiary of the Aboitiz Power Corp., said in a statement sent to TIMES that “the local government units of Davao City and Sta. Cruz have agreed on a 60%40% sharing of the 70% of Therma South, Inc’s (TSI) local business tax, respective­ly.”

“The remaining 30% will automatica­lly go to Davao City being the principal place of business of TSI,” it added.

The municipali­ty government of Sta. Cruz already enacted an ordinance specifying that it will enter into a MOA with the Davao City and TSI will finally come up with a clear extent of the company’s obligation­s to the LGUs.

Based on Section 143 of the Local Government Code, 30% of all sales recorded in the principal office shall be taxable by the city or municipali­ty where the principal office is located; and seventy percent (70%) of all sales recorded-in the principal office shall be taxable by the city or municipali­ty where the factory, project office, plant, or plantation is located.

TSI’s principal office is located in the City of Davao, while its coal plant is located partly in the City of Davao and partly in the Municipali­ty of Sta. Cruz, Davao del Sur.

“The MOA shall contain, among others, the sales allocation and collection sharing and the condition that every three years from the effectivit­y of the MOA, any of the City of Davao and the Municipali­ty of Sta. Cruz may request for the renegotiat­ion of the terms thereof, provided that until and unless a new MOA is entered into by the

parties, the executed MOA and the collection sharing therein agreed shall continue to be in effect,” the Sta. Cruz ordinance said. TSI started full commercial operations in February 2016 with about 20 electric cooperativ­es and private distributi­on utilities in Mindanao getting supply from its 300-megawatt baseload power plant.

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