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ABS-CBN maintains it paid all its taxes, complied with gov’t rules on tax payments

ABS-CBN maintained that it paid all its taxes annually and complied with all the rules and regulations with regards to tax payments, contrary to the allegations being thrown at the company.

Ricardo Tan, ABS-CBN Group chief financial officer, made the remark on Tuesday evening during the continuation of the House joint panel hearings on the ABS-CBN franchise issue.

"ABS-CBN has paid its proper taxes every year. Contrary to the allegations, there has not been a single year where ABS-CBN has paid zero taxes," Tan told the lawmakers present during the hearing.

According to Tan, ABS-CBN as a group paid a total of P5.2 billion various taxes in 2018, P465 million of which was income tax.

The Bureau of Internal Revenue even issued a tax clearance to ABS-CBN for that year, he said.

Tan also refuted allegations that ABS-CBN violated the terms and conditions of its franchise when it engaged in tax avoidance schemes and used its wholly-owned subsidiary, Big Dipper Digital Content and Design Inc., as a tax shield.

"Big Dipper Digital Content and Design Inc. is not a tax avoidance scheme. We did not deprive the government of revenues nor did we violate the terms of our franchise," he said.

According to him, Big Dipper applied and qualified for Philippine Economic Zone Authority (PEZA) registration "under the creative industry sector covering non-BPO, IT-enabled services and film, TV and theater arts production."

PEZA director general Charito Plaza, who participated in the hearing, confirmed that Big Dipper is registered with the agency as "IT-enabled creative content, digital archiving," and is "compliant with PEZA's requirements as to payment of their taxes."

She said that in 2016, Big Dipper paid P115 million in income tax, P120 million in 2017, and P119 million in 2019.

"The total taxes that they paid represents the 5% of their gross income earning, shared 3% for the national government through the BIR and 2% is the share of the local government," she said.

Further, Tan said ABS-CBN did not violate the law when it entered into a compromise agreement with BIR for the settlement of taxes.

"The right to enter into a compromise agreement is the remedy provided for under the Tax Code in cases where doubt may exist in the validity of assessment or financial incapacity. It is available to all taxpayers, not just to ABS-CBN," he said.

Likewise, ABS-CBN's Lingkod Kapamilya Foundation is not, and has never been, a tax shield, Tan said.

"The ABS-CBN Lingkod Kapamilya Foundation is a non-stock, non-profit foundation accredited by the Philippine Council for NGO Certification whose tax exemption has been confirmed by the BIR," he added.

The House Committee on Legislative Franchises and on Good Government and Public Accountability began hearing the bills granting another 25-year franchise to ABS-CBN after the House leadership decided to drop the measure that would supposedly give the network a provisional franchise until October 31, 2020.

Speaker Alan Peter Cayetano, himself an author of the provisional franchise bill, has said the issue on the ABS-CBN franchise has already become "so divisive" and is taking up the time even as there are more pressing matters to discuss such as that of COVID-19 response measures.

He, however, vowed to have a fair and comprehensive hearings on the issue at the committee level.

The House joint panel will continue the interpellation on ABS-CBN's alleged tax issues on its hearing on Wednesday afternoon. — RSJ, GMA News