Power Sector Assets and Liabilities Management Corporation (PSALM) paid P517.707 million tax obligations in a compromise deal with the Bureau of Internal Revenue (BIR) ,ending their decades-long tax disputes.

The government-run power firm said the tax remittance covered the years from 2006 to 2016, as well as the disputed tax assessments reckoned from years 2017 up to 2019.

“PSALM utilized its unrestricted and available funds to settle the tax obligations with the BIR since all the proceeds from its privatization activities are earmarked for the payment of stranded contract costs and stranded debts absorbed from the National Power Corporation,” the company said.

As emphasized by PSALM President and CEO Irene Besido-Garcia, “this global settlement of all the tax cases and disputed assessments marks a major accomplishment for PSALM as it resolves and ends many years of conflict between PSALM and the BIR.”

She qualified that the tax payments were made in compliance with the “whole of government approach” being enforced by the Duterte administration, primarily in resolving pending issues and concerns between and among government offices.

The state-run power firm conveyed “BIR amicably accepted the amount offered by PSALM,” qualifying further that the tax bureau had been “very fair to PSALM.”

PSALM added “this government-to-government arrangement with the BIR ensures a clean slate for PSALM,” with the company emphasizing that such will “lead to the dismissal of numerous pending cases between the two agencies.”

For instituting that warranted middle ground, the government-owned power company explained that “time and resources of both government agencies spend on protracted litigations will be saved.”

The power firm similarly indicated that “the remittance of PSALM will contribute to the revenue collection efforts of the BIR,” primarily in achieving the collection target that it had set for this year.

Many of the tax discord that PSALM had with the BIR could be attributed to the real property tax payments of the independent power producers (IPPs), which its precursor-company NPC had entered into, The tax disputes came about because of the application of differing tax assessment rates by their host-local government units.

In the IPP contracts, it should have been NPC (and obligation was later transferred to PSALM) that should have been settling the taxes due to the government-sponsored build-operate-transfer (BOT) contracts with the power producers.

With the recently issued Executive Order No. 157 of the Office of the President, which mandates uniform assessment rate for the RPT dues of the IPPs, PSALM specified that it gained leverage on finally settling its remaining tax obligations, chiefly with the power supply contracts underwritten with sovereign guarantees.

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