GMA 7 fights QC tax collection effort

Broadcaster GMA Network Inc. has sought to stop Quezon City Treasurer Edgar Villanueva from collecting taxes from the company for lack of a legal basis to do so.

GMA 7 filed recently in the QC Regional Trial Court a petition for prohibition against Villanueva after the latter on June 17 imposed on the network taxes of P823,973,981.21 for “business tax as contractor” and P3,154,607.71 for “dividends” based on actual sales from 2005 to 2010, plus surcharges and interest.

GMA 7 vice president for finance Ronnie Mastrili, in a July 6 letter to the QC Treasurer’s Office, said GMA had paid P266,190,773.43 in local franchise tax from 2006 to 2010, in accordance with the QC Revenue Code.

The network’s legal counsel Gener Asuncion said GMA 7 was not liable for the contractor tax because it did not fall under the definition of “contractor” in either the Local Government Code or the QC Revenue Code.

In a press statement, GMA 7 said it was primarily engaged in operating radio and television broadcast stations in the country and not in the sale of services that are subject to tax.

GMA does not produce or sell advertisements but merely broadcasts ads produced by ad companies. Hence, GMA is not covered in the definition of “contractor” for “advertising services,” the network said.

Moreover, it said GMA 7 found no legal basis for the QC government’s imposition of a business tax on the company’s dividends either in the Local Government Code or the QC Revenue Code.