The House ways and means committee approved today a proposed measure seeking to grant 'juicy' tax exemptions for the construction and operation of the P734-billion Bulacan airport project.
The House panel, chaired by Albay 2nd District Rep. Jose Maria Clemente Salceda, approved the proposal to exempt San Miguel Aerocity Inc. from all taxes during the construction of the New Manila International Airport and its surrounding developments.
“During the ten-year construction period, the grantee shall be exempt from any and all direct and indirect tax and fees of any kind, nature or description,” the committee’s approved version of House Bill No. 7241 read.
The tax incentives will cover San Miguel Aerocity’s investment in the 2,400-hectare aviation hub, along with the land development outside the terminal buildings, and the construction of tollroads that run to the airport.
San Miguel Aerocity, a wholly-owned airport subsidiary of San Miguel Corp., has bagged the 50-year "game-changer" concession deal to build, operate, and maintain this unsolicited private-public sector project in Bulakan, Bulacan.
“ exclusively from the construction, development, establishment, and operation of the airport and Airport City,” the committee pointed out.
The panel identified these levies as “income taxes, value-added taxes, percentage taxes, excise taxes, documentary stamp taxes, customs duties and tariffs, taxes on real estate, buildings and personal property.”
It also included “business taxes, franchise taxes, and supervision fees, levied, established or collected, or may be levied, established or collected, by any city, municipal, provincial or national authority.”
Once the project is completed, San Miguel Aerocity will also continue to enjoy some government incentives after the committee has allowed the company to keep its exemption from income taxes as well as taxes on real estate, buildings and personal property.
“However, such exemption… shall expire as soon as it is determined by a competent authority that the grantee has fully recovered its investment cost on the airport and on the Airport City,” the House ways and means committee said.
To compensate the forgone tax revenues due to exemptions, the committee, however, proposed a scheme to enable revenue sharing between the government and San Miguel Aerocity, setting a threshold on the concessionaire’s profit.
“After a competent authority has determined that the grantee has fully recovered its investment cost, the grantee shall be entitled to generate income from the Airport City equivalent to a project internal rate of return (IRR) of 12 percent per annum,” the provision read.
“If the Airport City IRR exceeds 12 percent per annum, the grantee shall remit to the National Government an amount… in excess of 12 percent - 100 percent to the National Government,” the panel said.