BIR Peza clear ABS-CBN

July 02, 2020

ABS-CBN is not using one of its subsidiaries as a “tax shield”, officials in charge of tax collection and the country’s special economic zones have told lawmakers.

“As far as tax payments... by Big Dipper, I think they are paying more or less correctly their taxes,” Albino Galanza, a regional director at the Bureau of Internal Revenue, said at a joint hearing at the House of Representatives on Wednesday, July 1.

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 (Peza). 

Deputy Speaker Rodante Marcoleta suggested that ABS-CBN had used Big Dipper as a tax shield that purportedly led to a negative 5 percent tax rate in 2018. 

Records, however, showed ABS-CBN’s tax rate that year was at four percent. 

Responding to questions asked by Rep. Alfredo Garbin if ABS-CBN, Galanza said there have been no findings that ABS-CBN had ever used Big Dipper to avoid paying taxes. 

Galanza disclosed that Big Dipper paid over P1.15 billion in taxes from 2016 to 2019.

His testimony affirmed 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.

He explained: “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.”

Peza 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 incentives for these firms are being evaluated not just by Peza, but also by the Department of Science and Technology, Department of Finance, National Economic and Development Authority, and other agencies.

Plaza told lawmakers Big Dipper had been paying a tax rate of 5 percent since 2015, 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,” she said.