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12 April 2024

NYC wins tax dispute over buildings owned by India, Mongolia and Philippines

By Agencies

New York City officials claimed victory in their attempt to collect millions of dollars in real estate taxes on three Manhattan buildings owned by the governments of India, Mongolia and the Philippines.


A federal judge ruled on Friday that diplomatic privileges and niceties don’t exempt the countries from having to pay at least some local taxes on the buildings that house staff and offices for their missions to the United Nations.


Under international treaties, consulates and embassies are generally tax exempt. Their status as sovereign territory often puts them outside the reach of US law.


But in New York’s case, the city argued that it had a right to collect taxes on portions of the structures used for non-diplomatic purposes.


India’s 26-story tower near the UN holds 20 floors worth of apartments, all occupied by diplomatic employees. Mongolia’s six-story building has two floors that serve as staff residences. The Philippines’ building, on a prime stretch of Fifth Avenue, has had a variety of commercial tenants, including a restaurant, a bank and an airline office.


For years, the three countries simply ignored their New York City tax bills, but the legal tide turned in the city’s favor when the Supreme Court ruled in June that the nations could, indeed, be sued over the matter in US courts.


In a written opinion issued on Friday, US District Judge Jed Rakoff sided with the city, which could put the three countries on the hook for a big payout.


As of September, the city claimed India owed it $39.4 million (Dh143.81 million), a total that includes millions of dollars in interest. Mongolia owed $4.2 million (Dh15.33 million). The city had been arguing that the Philippines owed $19 million (Dh69.35 million), as of 2005, but that amount is likely to change.

Rakoff said the law didn’t require the country to pay taxes on a restaurant that once operated on the site.


An attorney who represented the three nations in the suit, Robert A. Kandel, did not immediately return a phone message.


The long-running legal dispute had attracted attention from the US Department of State, which had sided with the foreign countries against the city. State Department officials had warned that if New York City won, the US might be forced to pay millions of dollars in taxes on various properties it controls abroad. (AP)