ABS-CBN is not using one of its subsidiaries as a “tax shield,” the officials in charge of tax collection and the special economic zones told lawmakers on Wednesday.
“As far as tax payments... by Big Dipper, I think they are paying more or less correctly their taxes,” Albino Galanza, a regional director of the Bureau of Internal Revenue, told a joint hearing at the House of Representatives.
Galanza was referring to Big Dipper Digital Content and Design, a digital archiving firm owned by ABS-CBN and registered with the Philippine Economic Zone Authority.
Deputy Speaker Rodante Marcoleta suggested that ABS-CBN had used Big Dipper as a tax shield, which supposedly led to a negative 5-percent tax rate in 2018.
Records, however, showed that ABS-CBN’s tax rate that year was 4 percent.
Meanwhile, lawmakers on Thursday denounced the National Telecommunications Commission’s latest cease-and-desist order against the cable and digital TV platforms of ABS-CBN.
Reps. Lito Atienza of Buhay, Joy Tambunting of Parañaque City, and Micaela Violago of Nueva Ecija warned of the repercussions of the CDO issued against ABS-CBN channels Sky Cable and TV Plus digital box, as well as the possible shutdown of the broadcast giant.
“Thousands of ABS-CBN employees could lose their jobs and this could worsen the country’s labor problems at this time of the coronavirus pandemic,” Atienza said.
Tambunting echoed Atienza, while Violago questioned the NTC’s timing in stopping the operations of ABS-CBN pending its application for franchise renewal. She said this was while it allowed at least 15 other similarly situated broadcast companies to continue operating despite the expiration of their franchises.
Still, Labor Secretary Silvestre Bello III accused the lawyers of ABS CBN of intellectual dishonesty for claiming that the Labor department had approved the seasonal work arrangement for the broadcast firm’s program employees.
“They are intellectually dishonest,” Bello said, adding the policy referred to and adopted more than 40 years ago was declared by the courts in 2004 to be invalid.
“To cite a policy that has been stricken down by the courts to have no basis in law and in fact is plain and simple dishonesty meant to mislead the people and the members of Congress,” he said.
Responding to questions by Rep. Alfredo Garbin, Galanza said there were no findings that ABS-CBN had ever used Big Dipper to avoid paying taxes.
He said Big Dipper paid over P1.15 billion in taxes from 2016 to 2019, and his testimony affirmed the statements made by ABS-CBN Group chief financial officer Ricardo Tan before the joint committee.
“Big Dipper is not a tax-avoidance scheme,” Tan said.
“It’s in a different line of business, as we’ve mentioned. It’s an IT-enabled firm that does specific services for ABS and for other companies, so that we can bring our content to the market here and abroad.”
Philippine Economic Zone Authority Director-General Charito Plaza also told lawmakers “there’s no such thing” as a tax shield given to Peza-registered firms like Big Dipper.
She said the incentives for these firms were being evaluated not just by Peza but by the Department of Science and Technology, Department of Finance, National Economic and Development Authority and other agencies.
She told lawmakers Big Dipper had been paying a tax rate of 5 percent since 2015, and after a six-year income-tax holiday extended to Peza-registered firms and had been a pioneer locator.
“They are among those who introduced new technology in a digital platform,” Plaza said.