11/21/2008 [ tribune.net.ph ]
The House committee on banks and financial intermediaries headed by Rep. Jaime Lopez, plans to look into reports that special purpose vehicles (SPVs) formed to dispose of idle assets among commercial banks have been turned into tools to evade taxes in the guise of helping banks and financial institutions unload their soured assets portfolios.
The SPV law was put into effect to encourage the local financial community to rid itself of such assets by extending them registration as well as tax privileges.
The House body is currently conducting an investigation in aid of legislation, through House Resolution (HR) 144, into the operations and activities of SPVs and banking institutions in line with the effective implementation of Republic Act 9182 as amended, also known as the SPV Act of 2002 and to determine whether there is still a need to further extend and amend the SPV Law.
HR 144 is principally authored by Party List Rep. Joel Villanueva of CIBAC and 2nd District, Laguna Rep. Justin “Timmy” Chipeco of the Nacionalista Party.
Complaints have reached the House that a number of entities, mostly banking institutions, have taken undue advantage of the SPV Law by creating SPVs and transferring their assets into these SPVs, allegedly in the nature of “true sales” to sanitize their balance sheets and qualify for tax incentives and privileges under the SPV Law when, in reality, these transfers were not “true sales” under the law’s definition.
It was also reported that a number of these SPVs that were formed were mere dummies of banks, some even foreign banks, and were not really true SPVs in violation of the criminal provisions of the Anti-Dummy Law. The Anti-Dummy Law limits the management, operation, administration and control of nationalized businesses or activities to Filipino citizens one of which is owning land in the Philippines.
At the beginning of the investigation by the committee conducted Tuesday, Nov. 18, resource person Fernando Aballa, Director of the BSP’s Integrated Service Division noted that the SPV Law was able to address the difficulties encountered by the financial sector in the aftermath of the 1997 Asian crisis, particularly allowing financial institutions to get rid of their non-performing assets and thus create liquidity in the market.
Lopez, for his part, expressed support for the law, saying many countries are adopting safety nets such as the SPV Law amid the snowballing economic crisis worldwide. Ruben Hortelano
