Lawmakers tax delinquency attack on ABS-CBN

MANILA, Philippines — Philippine Lawmakers permanently put an end to the franchise of Alto Broadcasting System – Chronicle Broadcasting Network (ABS-CBN) on July 10 due to tax delinquency.

After 13 hearings, the House of Representatives rejected the franchise renewal of ABS-CBN, having majority of the votes for its denial.

70 legislators voted to deny the new franchise and only 11 lawmakers casted votes in favor of renewal, while two inhibited and one opted to abstain.

According to Kabayan Partylist Rep. Ron Salo during one of the joint congressional hearings on ABS-CBN’s legislative franchise application, the broadcast giant used the Big Dipper Company, which is a company it formed as a tax shield.

“It is a very creative, unusual tax scheme in order for ABS-CBN Corporation to evade paying the proper amount of taxes to the government,” Salo said.

Meanwhile during the same hearing, as represented by Ricardo Tan, the corporation’s chief financial officer; and Othello Carag as the group’s lawyer, ABS-CBN strongly insisted that the network committed no wrongdoing in creating Big Dipper and registering it with the Philippine Economic Zone Authority chaired by Charito Plaza.

Big Dipper Digital Content and Design Inc. utilized the tax incentives granted under PEZA Law as an IT Enterprise that is in the business of “repurposing ABS-CBN content for export”.

“To top it all, its dividend declarations to ABS-CBN Corporation which amounted to P1B in 2016, P2.5B in 2017, P2.2 B in 2018, and P2.3B in 2019 are all tax-exempt because they are both domestic companies,” Salo explained.

In addition, the charitable arm of the network received a total of P129 million donations from the company — which amounts given on various occasions — were deducted from the computation of its income tax, as pointed out by Cavite Rep. Crispin Remulla.

“Sa madaling salita, hindi totoo na puso-puso, iyan po ay may business sense na nakakatulong sa inyong kumpanya,” Remulla said.

The network’s claim of paying the government over P14 billion in taxes was most likely a “budol-budol” stunt as compared by Anakalusugan Partylist Rep. Michael Defensor since majority of the amount came from the taxes withheld from the payment of several taxes.

The accusation by Defensor was raised when representatives from the network were only able to pay the government P757 million income tax in 2016; P195.8 million and P294 million in creditable withholding tax in 2017; and P163.9 million with P312.08 million in creditable income tax in 2018.

However, after the joint hearing, ABS-CBN released an article defending that the company also set the record straight that ABS-CBN Corp. did not have a “negative 5 percent effective tax rate for 2018”, an allegation that has been raised in the joint House hearing as well as in social media.

“In fact, ABS-CBN paid P164 million — not negative P84 million — that year,” Tan said.

Cavite Representative Elpidio Barzaga noted the seeming misrepresented tax payments declared by ABS-CBN during a Senate hearing. He said that over the P14 billion taxes that the network is saying, only P1.4 billion was its real contribution to the government since the remaining were already from the withholding taxes of its workers and suppliers. 

In spite of the accusations of the lawmakers, ABS-CBN was still sided by the Bureau of Internal Revenue represented by Asst. Commissioner Manuel Mapot and PEZA’s Plaza, saying that they see nothing unlawful with the way carried out its business.

Above all this, ABS-CBN remains firm in its stand against all accusations thrown upon them that they did nothing wrong with regards to their contribution of taxes proving that the corporation and its subsidiaries contributed P71.5 billion in taxes to the national economy within a period of 17 years.

LAYOUT BY: Cristine Joie Q. Bacud

PHOTO SOURCE(S): Malacañang Photo Bureau, Edwin Bacasmas via inquirer.net