San Miguel Corporation’s proposed international airport at Bulacan is a step closer to getting tax breaks and an official franchise out of Congress.
With 22 votes and no resistance, the Senate on Monday approved on third and final reading the invoice granting San Miguel Aerocity Inc. the authority to assemble, build, and operate the New Manila International Airport in Bulakan town, making the step closer to becoming law.
San Miguel bagged the ₱736-billion job in 2019 after an unsolicited proposal is submitted to the Department of Transportation. The airport will probably have four runways for national and international flights, which ought to cater to up to 200 million passengers yearly.
The franchise provides the conglomerate 50 years to operate the job before it turns on its possession and maintenance to the federal government, including a 10-year period to build airport facilities. In this period, San Miguel is exempt from paying direct and indirect taxes and fees regarding the project, such as income taxes, value-added taxes, percentage taxes, excise taxes, documentary stamp taxes, customs duties, and tariffs, in addition to property taxes on land, buildings, and personal property.
For the remainder of the franchise period, the bill states that the corporation will stay exempt from paying income and property taxes until authorities declare that the proponent has”fully recovered its investment price” on the project.
The step also occupies a profit-sharing strategy, where the government will obtain any windfall outside of the twelve percent annual internal rate of return after the Airport City operates.
Apart from construction airport infrastructure, San Miguel is likewise licensed to construct and maintain toll roads, railways, bulk transport systems, resorts, hangars, and similar facilities inside the 2,500-hectare complicated, which crosses Barangays Taliptip and Bambang of the said town. The area is going to be called”Airport City.”
This will serve as a new entry point to the greater Manila area and can alleviate congestion in the Ninoy Aquino International Airport and complement the Clark International Airport in nearby Pampanga.
The bill requires SMC to begin building in a year when the law has been passed and to possess the airport running in the next 12 decades. Besides, it dictates the private firm to pay a cash bond to the Civil Aviation Authority of the Philippines, which could be forfeited if SMC fails to deliver. San Miguel can be necessary to account for its gross payments and submit an annual tally to this Commission on Audit and the Bureau of the Treasury.
Seismologists earlier cautioned that the Bulacan airport is in danger of heavy flooding and soft ground. However, the project proponents said these would be addressed by engineering design with the support of its international partners Groupe ADPi, Meinhardt Group and Jacobs — the same firms behind Changi Airport in Singapore, the Atlanta Airport in the United States, along with Charles de Gaulle Airport in France.
SMC earlier assured that homeless communities would be relocated, and jobs will be offered because the coastal region has been cleared for industrial development.
Senators were entirely sold to the concept of this airport complex, banking to the job to generate thousands of jobs, especially for Filipino workers displaced by the COVID-19 pandemic.
Senator Richard Gordon estimates that the foregone taxes at ₱38 billion during the initial decade of construction, followed by up to 2 billion waived taxes per year when the worldwide gateway starts working.
“There is nothing wrong with being wealthy in the country so long as you earn your money in an honest, creative way,” Gordon said through the Senate plenary session, including that the project will probably attract more overseas investors into Central Luzon.
Meanwhile, Senate Minority Leader Franklin Drilon warned that the tax perks granted to San Miguel should remain intact despite a different bill backed by the Department of Finance that seeks to reform tax incentives offered to investors and exporters.
“It is my submission that this becomes a contract between the buyer and also the state… We ought to make the (tax incentives) rationalization effective about the brand new entrants, not on those people who are here,” Drilon explained, referring to the Corporate Recovery and Tax Incentives for Enterprises or CREATE Act now pending before the plenary.