SN Aboitiz Power settles tax dispute with Benguet

Posted on October 27, 2016

http://www.bworldonline.com/content.php?section=Corporate&title=sn-aboitiz-power-settles-tax-dispute-with-benguet&id=135481

SN ABOITIZ Power-Benguet, Inc. (SNAP-Benguet) and the province hosting its two hydroelectric power plants have reached a compromise agreement on a tax dispute over how the company’s properties in the area should be assessed.

Joseph S. Yu, SN Aboitiz Power chief operating officer, said the company will no longer demand a refund on the excess taxes they have paid to the municipalities of Bokod and Itogon in Benguet province.

In a statement, Mr. Yu said the host communities may use the full P157.7 million -- the amount collected in real property tax during the three-year dispute. The parties signed the agreement on Oct. 25, 2016 in Baguio City.

SNAP-Benguet owns and operates the 105-megawatt Ambuklao hydroelectric power plant in Bokod and the 140-MW Binga hydro plant in Itogon. It is a joint venture of SN Power of Norway and Aboitiz Power Corp.

The dispute arose after Benguet in 2010 issued an ordinance lowering the tax rate of structures to 40% from 80%. But SNAP said at the start of the ordinance’s implementation in 2014, Bokod and Itogon applied the higher tax rate of 80% to some of its properties after assessing them as machinery.

The company filed its opposition with the provincial treasurer’s office and later to the local board of assessment appeals. It went on to pay the assessed amount “under protest” from 2014 to 2016 while the appeal was pending.

“Because of the payment under protest, Bokod and Itogon could use only 50% of the collected amount, while the remaining 50% was held in trust,” the company said.

Under the agreement, SNAP said the parties decided to resolve the real property tax appeals “amicably and have entered into an agreement that is acceptable and fair to both of them.”

The agreement also recognized the company’s legal position that the properties in question are “structures” and not machinery, making them eligible for the lower tax rate of 40%.

Benguet Governor Crescencio C. Pacalso said: “We consider SNAP as part of our constituents and we make it a point that the people, community and company in our constituency are in good terms. This agreement will be able to help communities especially now that we are on the verge of rehabilitation after Typhoons Karen and Lawin.” -- Victor V. Saulon