COA affirms notice of charge on ‘uncollected’ tax from Malampaya contractors

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THE Commission on Audit (COA) has affirmed the notice of charge (NC) on the P53-billion “uncollected” tax from the contractors of the Malampaya Natural Gas Project for 2002 to 2009.

COA’s Commission Proper denied the motions for reconsideration of Shell Philippines Exploration B.V., Philippine National Oil Company Exploration Corporation, Chevron Malampaya LLC — the contractors of the gas project — as well as the Energy department’s motion for reconsideration of a 2015 COA decision which affirmed the NC dated October 5, 2010.

In a ruling dated January 24, 2018, COA said that “the assumption of income tax under” Service Contract (SC) 38 violated Presidential Decrees 87 and 1459 because it effectively resulted in a lower government share than the minimum percentage under the law.

“Contrary to movants’ claim, the aforementioned laws do not contain any specific provision to the effect that the income taxes of the contractors are part of the 60 percent government share,” COA said.


According to the movants, the arrangement under the service contract did not result in tax exemption.

But COA said that “[t]he tax assumption scheme resulted in the contractors being effectively immune from amendatory income tax laws.”

According to COA, the unremitted share of the government in the project reached P146.79 billion from 2002 to 2016. MA. REINA LEANNE C. TOLENTINO

 

 

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