The House of Representatives approved on third and final reading a bill that grants San Miguel Aerocity, Inc. the franchise to construct and operate an airport and an adjacent airport complex in Bulacan.
The Lower House on September 7 approved House Bill (HB) 7507, which grants a 50-year license as well as tax privileges to the subsidiary of San Miguel Corp. for the construction, development, operation and maintenance of a domestic and international airport and an “airport city” in Bulakan, Bulacan.
The bill also grants San Miguel Aerocity the right to construct, acquire, lease, operate or manage properties to implement the project, including toll roads, railroads, mass transit systems, hotels, warehouses, and other facilities.
HB 7507 likewise exempts San Miguel Aerocity from paying all direct and indirect taxes and fees during the 10-year construction period, which is included in the 50-year franchise period. This exemption includes payment of income taxes, value-added taxes, percentage taxes, excise taxes, documentary stamp taxes, customs duties and tariffs; taxes on real estate, buildings and personal property, business and franchise; and supervision fees.
READ: House bill giving tax perks to Bulacan airport project hurdles committee
After the construction period and during the term of the franchise, the San Miguel Aerocity project will remain exempt from income tax and taxes on real estate, buildings and property.
The tax exemptions will expire “as soon as it is determined by a competent authority that the grantee has fully recovered its investment cost.”
The Senate has yet to pass the counterpart bill providing San Miguel Aerocity’s franchise.
The Department of Transportation (DOTr) and San Miguel Aerocity in September 2019 signed the concession agreement for the project. This came after the notice of award was handed to SMC in August 2019 after its unsolicited proposal went uncontested.
Under the deal, San Miguel will finance, design, construct, supply, complete, test, commission, and operate and maintain the new international gateway.
The 50 year-concession period will start after construction of the project’s initial phase is completed. The project has a total cost of P735.63 billion under a build-operate-transfer arrangement.
The airport, to be built on a 2,500-hectare area in Bulakan, will have a passenger terminal building with a design capacity of 100 million to 200 million passengers per year, four parallel runways that are upgradable to six, and eight taxiways.
Construction of the unsolicited project was targeted to start by December 2019, but DOTr last July said SMC would start construction by October 2020.
