City Council creates body to look into COWD-BIR tax dispute

July 8, 2008

city council votes By Lizanilla J. Amarga

City councilors had now created a taskforce to look into the tax problems of the Cagayan de Oro Water District (COWD) that may affect its assets, operations and capacity to continue distributing water supply all over the city.

In a regular city council session, Committee on Public Utility chairperson City Councilor Ian Mark Nacaya informed his colleagues that regional office of the Bureau of Internal Revenues (BIR-10) had now served COWD three documents for failing to pay P341 million in income and franchise taxes.

The documents include a “Final Notice Before Seizure” from BIR-10 to force COWD to pay the P120 million income/franchise tax the water firm owes the tax agency; a Warrant of Garnishment for P23,616,440.45 to “seize” COWD’s bank deposits at Land Bank of the Philippines-Velez Branch; and Warrant of Distraint dated June 16 and served June 26, 2008.

Once BIR-10 moves against COWD based on these documents, Nacaya said this can have the effect of putting COWD’s bank accounts and other assets under “frozen” status.

He said this would somehow cripple COWD as he was informed that 25 to 30 percent of COWD’s clients make their monthly payments through the bank.

“Their payments might be included in the garnishment,” he told his colleagues.

Nacaya said this tax dispute between the two government agencies is now submitted before the Department of Justice (DOJ) and the latter had yet to actually come out with its opinion on this controversy.

Despite this, he said BIR-10 is showing determination to proceed against COWD without regard of how this will affect the city.

In light of this, he moved that a body be created to look into this latest development in the tax dispute between the COWD and the BIR-10.

He recommended that the body will be composed of the Committee on Rules led by Majority Floor Leader Ramon Tabor and the Committee on Public Utility under him.

The move was unanimously approved by the City Council.

Already, COWD management came out with a statement saying that they received the warrants noon last Thursday, June 26, 2008 and on that same afternoon their bank accounts were garnished.

“In effect, our capability to operate and implement our projects will be adversely affected. Rest assured however that we will do everything we can to continue providing efficient water service,” the water firm said.

COWD said BIR-10 last April 2007 issued a similar Warrant against their our depository banks to order them “to transfer, surrender, and/or remit” COWD’s bank deposits.

The move was to secure payment of the assessed tax liabilities covering the period 1997-2003 in the amount of P340,948,913.57, inclusive of surcharges and penalties but COWD said “the same was lifted a few weeks later.”

The water firm said they are “in good faith” as it “exerted its best efforts and has fully paid its franchise taxes for 2006, 2007 and the current year while paying partially the franchise taxes for the previous years.”

“And yet, the issuance of the warrants of distraint and/or levy and garnishment were still pursued,” COWD statement’s reads.

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Written by admin · Filed Under Cagayan de Oro