Megaworld shareholders lost P111M after BIR fiasco

PUBLIC shareholders of Megaworld Corp. lost more than P100 million in value following the Bureau of Internal Revenue's (BIR) announcement of a supposed closure order against the property developer.

"Collectively, the public shareholders of MEG lost about P111 million in value from May 17-23," Finance Secretary Carlos Dominguez 3rd told reporters in a Viber message late Monday.

Dominguez said that of the total, the Government Service Insurance System and Social Security System lost P37 million.

To recall, the BIR last May 17 issued an advisory that Megaworld would be facing closure the next day.

BIR Regional Director Eduardo Pagulayan Jr. in a recent hearing conducted by the House Committee on Ways and Means explained that the closure order was due to Megaworld's alleged tax liabilities from a joint venture with the Bases Conversion and Development Authority.

He said Megaworld refused to comply with the BIR Revenue Region 8B audit.

The bureau, however, immediately reversed its directive and said that the closure order was being "held in abeyance until further notice," claiming that Megaworld had shown full cooperation.

Megaworld Corp. Executive Vice President Kevin Tan, for his part, said the sudden announcement of the closure order had a great impact on the company.

"We lost a significant amount of sales as a result of an immediate backlash of the buzz stemming from the BIR's announcement," said Tan.

"Simultaneously there was a selldown of more than P400-million worth of Megaworld shares as soon as the news of the closure order against our company broke out," he added.

Tan noted that the incident adversely impacted investors' confidence as it set off a massive shockwave in the business community.

The company also disclosed that it also questioned BIR Revenue Region 8B's jurisdiction in conducting a tax audit on its prices of property because it is regularly audited by the BIR head office's Large Taxpayers Service (LTS).

Following the misunderstanding, Dominguez over the weekend ordered the BIR to halt the formation of special audit task forces.

The revenue special orders creating special audit task forces on real estate developers and direct selling/multilevel marketing, as well as the operations memoranda creating task forces for Philippine Offshore Gaming Operators and electronic sabong (e-sabong), were suspended on Friday until further notice.

The audit on real property firms, including Megaworld, will now be handled by the LTS.

Source: TheManila Times