Tax court OKs ABS-CBN’s P16-M settlement deal

MANILA, Philippines — The Court of Tax Appeals (CTA) has approved another settlement deal between the Bureau of Internal Revenue (BIR) and media giant ABS-CBN Corp., allowing the latter to just pay P16.105 million instead of P30.952 million in tax liabilities of its subsidiary company for 2009.

In a 16-page resolution promulgated on July 31, the court’s First Division has granted the joint compromise agreement (JCA) between BIR and ABS-CBN Film Productions Inc. entered into late last year.

The First Division said it found the JCA to be valid under Section 204 (A) of the National Internal Revenue Code (NIRC), which states that a compromise deal can be allowed if there is doubt on the validity of the BIR’s tax assessment.

“In petitioner’s (ABS-CBN Film) memorandum, it refuted such alleged deficiency taxes by presenting evidence during the trial that the same were not based on actual facts but on mere presumptions,” the court said.

The tax court concurred that the BIR’s assessment was based on “mere presumptions” grounded on the supposed discrepancies between the ABS-CBN Film’s book of accounts, books of local purchases and the summary list of sales as against its summary alphalist of withholding tax submitted to the BIR.

“Absent any empirical evidence that the alleged differences in the data matching were indeed taxable income received by the petitioner, said deficiency assessments were mere presumptions,” the First Division said.

Furtheremore, the court said all the deputy commissioners of the BIR, sitting as members of the National Evaluation Board (NEB), unanimously approved the JCA, more than the requisite majority vote under Section 204 (A) of the NIRC.

Under the approved compromise deal, ABS-CBN Film would just have to pay 40 percent of the assessed income tax and value-added tax, while the assessed withholding taxes would still have to be paid in full.

Last July 8, the CTA Special First Division also approved a compromise agreement between BIR and ABS-CBN News Channel, another subsidiary company of ABS-CBN.

Under the deal, ABS-CBN News Channel (formerly Sarimanok News Network Inc. ) would just have to pay P17.837 million in taxes for 2009, five times less than the original amount of P97.079 million assessed by the BIR.

Last Feb. 27, the tax court’s Second Division also approved a compromise deal between ABS-CBN and BIR to settle the media giant’s tax liabilities for 2009.

Under the deal, ABS-CBN Corp. would pay P152.44 million equivalent to 40 percent of the assessed income tax, value-added tax and documentary stamp tax defficiencies and 100 percent of the assessed expanded withholding tax, compensation withholding tax, and final withholding tax defficiencies.

In turn, the BIR agreed to withdraw and cancel the final letter of demand (FLD) dated July 31, 2014 it earlier issued against the media firm.

It was not stated in the resolution the total amount of tax liabilities assessed by the BIR against ABS-CBN.