Philippines To Settle Tax Dispute With New York

by Leroy Baker, Tax-News.com, New York

03 February 2009

A six-year legal dispute between the Philippines and New York over unpaid taxes has been resolved.

The dispute erupted in 2003 when the US District Court in New York filed legal proceedings against the Philippine government for refuting the State's claims that it had failed to pay any property taxes to the owners of a New York building between the years of 1974 and 1996.

During this time, the property became the base for an office of Philippine Airlines, a branch of the Philippine National Bank and a Filipino restaurant.

Initially, the City's government sought around USD37m in unpaid taxes and interest from the Philippines. However, this amount was contested by the latter, who tried to appeal the commercial nature of the three businesses in a bid to escape the fines.

The eventual sum was settled upon after an intense and lengthy round of court proceedings.

The compliance of the Philippine government in paying the USD9m arrears has resulted in the dismissal of the legal case against it by New York's state government - an process which could have resulted in around USD27m worth of fines against the Philippines.

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