Court orders Metrobank to pay P3.79-B tax

REPORT FROM BUSINESSWORLD THE COURT of Tax Appeals has ordered Metropolitan Bank and Trust Co. (Metrobank) to pay the Bureau of Internal Revenue P3.79 billion in back taxes covering the years 1995 to 1998, including interest. In a 23-page decision penned by Associate Justice Juanito C. Castañeda, Jr., the tax court said the bank’s universal savings account deposits, interbank call loans and onshore income arising from foreign currency deposit unit (FCDU) transactions are subject to documentary stamp taxes. In a statement, Metrobank said it was pursuing legal remedies to settle the issue. Metrobank Assistant Corporate Secretary Antonio Viray said the bank had sought reconsideration of the ruling. "In any event, we are ready to avail of other legal remedies, including going to the Supreme Court, to finally resolve this industry issue," he added. The bank earlier claimed its universal savings account should be exempted from tax since it is not a time or certificate of deposit under the amended Tax Code of 1997. It said the account offers the flexibility of a regular savings account and payable on demand. But tax court noted the account "demonstrates identical features of a time deposit." Like a certificate of deposit, it offers a holding period so a client may avail himself of higher interest. A penalty is also imposed if the depositor withdraws the money ahead of the maturity date. Documentary stamp taxes are also imposed on deposit substitutes or loan agreements such as the bank’s interbank call loans, the tax court pointed out. In a separate statement, BIR Deputy Commissioner Gregorio V. Cabantac said of the ruling: "We want to bring home the message that the BIR is relentlessly pursuing tax evasion cases against erring companies and individuals, and we are optimistic that the long arm of the law will finally catch up with them." — Ira P. Pedrasa/BusinessWorld