House OKs franchise for SMC’s Bulacan airport project on 2nd reading

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Metro Manila (CNN Philippines, September 1) — Lawmakers approve on second reading a measure granting San Miguel Corporation (SMC) the franchise for the construction and operation of the P735.6-billion international airport in Bulacan.

House Bill No. 7507 exempts SMC from all direct and indirect taxes, as well as fees to build, develop, and operate the 2,500-hectare New Manila International Airport over the next ten years. The franchise also allows SMC to construct, operate and maintain a commercial complex dubbed ‘Airport City’ in Bulakan, Bulacan.

On August 26, the House Committee on Ways and Means approved tax exemptions to SMC. During the airport’s construction, the company does not have to pay income taxes, value-added taxes, percentage taxes, excise taxes, documentary stamp taxes, customs duties and tariffs, and property taxes on land, buildings and personal property.

It also approved the exemption of SMC from business taxes, franchise taxes, and supervision fees.

The bill also contains a profit-sharing agreement that will require the company’s subsidiary who will handle the airport’s operations to share half of its profits to the government above a 12 percent profit margin, and all profits above 14 percent.

In August 2019, SMC was granted the 50-year concession deal. SMC President and COO Ramon Ang said the construction of the aerotropolis will start in October, after being delayed by the review of the Justice Department on the contract and the quarantine restrictions due to the COVID-19 pandemic.

Upon completion, the international airport is expected to cater to about 200 million passengers annually, helping decongest the Ninoy Aquino International Airport.

CNN Philippines' Xianne Arcangel contributed to this report.