Smart’s offices in Manila being locked by local authorities over a tax dispute

The Makati City government issued on Monday a closure order against telecommunications firm Smart Communications Inc. due to unpaid taxes and lack of valid business permit.

According to the Makati City Treasurer’s Office examination launched in 2016, Smart Communciations, Inc. has failed to settle or obtain any relief from the courts over its franchise tax deficiency worth over PHP3.2 billion covering the period January 2012 to December 2015.

Makati City Administrator Claro Certeza emphasized that the company’s neglect of its tax lliabilities is not allowed in the city.

“When businesses in Makati choose to operate without a valid business permit, they are essentially operating outside the law. This is unacceptable, and I want to make it clear that we will not tolerate this kind of behavior, whether you are a big or small company,” Certeza said.

He recalled that the city government had requested Smart to submit a breakdown of revenues and business taxes paid in all branches nationwide, but the telecommunications giant has failed to present the documents.

It was stated on the City of Makati Business Permits Office’s closure order dated Feb. 23, 2023 that Smart Communications, Inc. headquarters located in Ayala Ave,, Barangay San Lorenzo violated Section 4A.01 of the Revised Makati Revenue Code or City Ordinance No. 2004-A-025.

“You are hereby commanded to cease and desist from further operating your business establishment until such time compliance with the said ordinance is made,” the order read.

In 2018, Smart filed a petition for review before the Makati Regional Trial Court (RTC) 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 filed a motion for production and inspection of documents, which the court granted.

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 which denied the company’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.

Mayor Abby Binay had repeatedly reminded all businesses in Makati to comply with the laws and obtain the necessary permits before operating in the city.

“I am committed to making sure all businesses are operating legally. It is important for businesses to know that we take these matters seriously and will take action when necessary,” said Binay.

Last year, the city’s Business Permits and Licensing Office shut down 191 business establishments due to lack of business permits. PNA