SC FINDINGS AND RECOMMENDATIONS

As can be gleaned from its Agreements, after the 4 year ITH was finished, Big Dipper applied
for a “Pioneer Status” and extended its ITH for another 2 years. After the ITH period, Big
Dipper became entitled to pay a special 5% tax on gross income in lieu of all national and local
taxes, among other fiscal incentives provided. In this case, starting 2015, income from Big
Dipper’s services have been subject to 5% preferential rate.
ABS-CBN Hungary and its branch, ABS-CBN Luxembourg, are taxed at its source of income.
Hungary and Luxembourg are well-known tax havens, with Hungary having the lowest
corporate income tax in the European Union at 9%. 93
ABS-CBN Corporation also receives dividends from Big Dipper, all of which are tax exempt
pursuant to Section 27(D)(4) of the National Internal Revenue Code, which provides that
“Dividends received by a domestic corporation from another domestic corporation shall not
be subject to tax.”
Compromise
Agreements entered
into by ABS-CBN
Corporation and its
subsidiaries
Judicial Records show that ABS-CBN entered into Compromise Agreements with the BIR in
2018 and 2019 as follows: 94
Date Case Name BIR Assessed
Amount (for alleged
deficiency internal
revenue taxes)
Amount Paid (as per
Compromise
Agreement)
P95.52 Million P16.10 Million
31 July 2019 ABS-CBN Film
CIR 95
Productions Inc. vs.
P97.08 Million P17.83 Million
08 July 2019 Sarimanok News,
CIR 96
Network, Inc. vs.
27 February
2019
23 November
2018
ABS-CBN Corp. vs. P2.5 Billion 98 P152.4 Million
CIR 97
ABS-CBN Film Not mentioned P3.08 Million
CIR 99
Productions, Inc. vs.
93
https://taxfoundation.org/2020-corporate-tax-rates-ineurope/#:~:text=Hungary%20(9%20percent)%2C%20Ireland,tax%20rate%20of%2021.9%20percent.
94
https://www.philstar.com/business/2020/01/17/1985610/does-abs-cbn-have-tax-deficiencies-unpaid-debts
95
CTA Case No. 9284.
96
CTA Case No. 9285.
97
CTA Case No. 9411.
98
https://cnnphilippines.com/business/2020/7/3/ABS-CBN-defends-compromise-agreement-BIR.html
99
CTA Case No. 9283.
28