Smart Communications Inc. said its legal and tax teams are in talks with the Makati City local government over an alleged P3.2 billion tax deficiency and for operating without business permit since 2019.
“Smart remains committed to complying with Makati City’s local tax ordinances, and with applicable national laws, in respect of local taxation,” the company said.
“Smart has filed the appropriate cases to resolve outstanding legal issues; these cases remain pending,” it added.
The enterprise also assured the public that its services will remain available and accessible to its subscribers.
The Makati City Government on Monday issued a closure order against Smart for operating without a business permit since 2019.
To date, Smart allegedly failed to settle or obtain any relief from the courts over its franchise tax deficiency worth over P3.2 billion covering the period January 2012 to December 2015.
In an order of desistance/closure dated February 23, 2023, the City said Smart’s headquarters, located at 6799 Ayala Ave. in Brgy. San Lorenzo, violated Section 4A.01 of the Revised Makati Revenue Code or City Ordinance No. 2004-A-025.
The case stemmed from an examination launched by the Office of the City Treasurer in 2016, which concluded that Smart Communications Inc. owed the city government over P3.2 billion in franchise tax over the four-year period.
In 2018, Smart filed a petition for review before the Makati Regional Trial Court Branch 133 to seek the nullification of the Office of City Treasurer’s Notice of Assessment, which states that the telecommunications giant did not pay the franchise tax.
During the trial, the City Government of Makati filed a motion for production and inspection of documents, which the court granted. However, on May 31, 2019, Smart filed a comment/opposition against Makati’s motion and challenged the court’s decision before the Court of Tax Appeals (CTA).
In 2022, CTA denied Smart’s petition and affirmed the decision of the Makati RTC Branch 155.
Smart argued that the city has no jurisdiction to audit the company’s financial statements and operations in other branches nationwide, adding that it had submitted all records related to its operations within the city and paid the necessary taxes.
The CTA, however, said Makati has the authority to investigate Smart’s entire operations under the Local Government Code. Smart has yet to elevate the case to the Supreme Court.
