COCKTALES | Henares warns mayors extending VAT exemption

Mayors planning to extend VAT-exemption to subdivisions on their association dues, consider this as fair warning.

BIR Commissioner Kim Jacinto-Henares has said she would not hesitate to publish the names of mayors who succumb to popular calls from homeowners’ associations to exempt their monthly dues from the expanded value-added taxation.

“If they do, I will publish their names,” Henares told reporters Thursday. “It’s a statement on their people that their (local) governments can not deliver basic functions like security and sanitation.”

Despite the fact that the Magna Carta for Homeowners and Homeowners Association of 2010 has a provision for the VAT exemption on subdivision dues, such was revoked in early February by Henares, placing them under the same category as VAT-covered condominium dues.

Still, the Henares ruling allowed for a loophole to comply with the Magna Carta intent. And it works this way. Homeowners’ associations that wish to get VAT relief must first secure a mayor’s certification attesting that the “basic community services and facilities” are being provided by the private subdivision, not by the local government.

The certified financial statements of the subdivision association must also accompany the city hall certification.

Despite the campaign season, not a single mayor throughout the country has so far issued any certification for VAT exemption, according to BIR officials.

But the condominium front has proved far testier. An industry association has already filed a case before the Quezon City Regional Trial Court to challenge the legality of the BIR ruling removing the 12-percent VAT exemption on association dues, said Deputy Commissioner Estela Sales.
Notwithstanding the pendency of the case, the collection and remittance of VAT on the condo dues to the BIR continues until the court rules otherwise, Sales said.

No list of names in substituted-filing method

Henares also rejected calls for the BIR to publish the names of top individual taxpayers who had filed through the substituted-filing method, whose tax payments she admitted were much larger than the publicly-available Top 500 list of individual income
taxpayers.

The BIR chief admitted that the agency had winnowed the 2011 list to separate the taxpayers whose respective offices filed the tax returns on their behalf, from the taxpayers who had actually affixed their own signatures on the income-tax returns.

“We deliberately removed people who are under substituted filing,” she said, explaining why a number of taipans and big businessmen who in the past years had figured prominently in the annual list found their names missing in the latest edition.

That was also the reason why the Top 500 taxpayers of 2011, to a man, paid less than their 2010 counterparts.

For instance, P.Noy sister and actress Kris Aquino contributed about P49.8 million in income tax to make her the top individual taxpayer for 2011.

The actress’s tax bite was nearly 50 percent lower than the P75 million-plus paid by the top taxpayer in 2010, Davao contractor Vicente Lao.

Lao inexplicably dropped out of the 2011 list, along with the 2nd highest 2010 taxpayer, Splash owner Rolando Hortaleza and third placer, movie director Carlo Caparas.

Henares, who admitted that there was no regulatory prohibition on her office to publish the separate “substitute-filers” list, admitted that savvy CEOs and publicity-shy businessmen can wiggle themselves out of public scrutiny if they allow their companies to file the tax returns on their behalf.

“If you yourself did not file and sign an income tax return — if you had a ‘substituted filing’ where your company withheld income taxes for you and remitted it straight to the BIR —it will not matter how big your salary and tax payments are, you will not appear on the list,” she said.

Henares made the statement when asked why the Lopezes, for instance, were missing from the 2011 list, when all along the owners of ABS-CBN broadcast and the First Philippine power empires had been prominent in the previous years’ disclosures.

A similar explanation had earlier been advanced by Ramos-era Finance Undersecretary Romeo Bernardo to defend the perennial absence of his current bosses, the Zobels.

Except for 2010, brothers Jaime Augusto and Fernando Zobel had also been absent in the 2011, 2009 and in the first BIR list, issued in 2008.

Even staunch P.Noy supporter, Ramos-era Finance Secretary Ramon del Rosario Jr. was surprised at his non-inclusion in the latest list, even though, under added questioning, he admitted he was not sure if his staff had availed of the substituted filing-procedure for himself.

Still, the Phinma CEO said the BIR Top 500 list should include even big taxpayers who opt for the substituted-filing route.

“Otherwise, the list would be meaningless,” Del Rosario said. –Victor C. Agustin, E-mail: cocktales_tv5@yahoo.com