CTA rules in favor of Smart, cancels P48M tax

The Court of Tax Appeals (CTA) ruled in favor of Smart Communications, canceling over P48 million in local franchise taxes assessed by Cagayan province for 2011-2015.

In its ruling on February 27, the CTA's Second Division found that the tax assessment for 2011 had already expired due to a demand letter received after the prescribed period.

The court also cited Article 266(b) of the Local Government Code (LGC), which prohibits provinces from taxing businesses operating within city jurisdictions, and noted Smart’s operations were recorded in Tuguegarao City, outside Cagayan's jurisdiction.

Additionally, the CTA ruled that Cagayan failed to properly examine Smart's books of accounts and records before making its assessment.

The decision highlights Smart's appeal process, including initial denials by lower courts due to jurisdictional issues and a lack of proper examination of the company’s books.