Big Dipper a big tax subterfuge, says Marcoleta
SAGIP Party-list Rep. Rodante Marcoleta on Wednesday alleged that ABS-CBN-owned Big Dipper Digital Content Design, Inc. is nothing but a tool that the network used to pay lower taxes than it should.
“To us, Big Dipper was organized simply to act as a subterfuge para magiging understated po yung income (in order to make their income look understated) as reflected in the two sets of revenues I presented,” Marcoleta said Wednesday at the joint House panel hearing on ABS-CBN's pending franchise renewal.
“ consolidated and the gross revenue of the parent company ABS-CBN, there is a difference of P186 billion. This is the most intriguing question that needs to be resolved,” said the solon, who is arguably the most vocal critic of the network when it comes to the marathon hearings.
Marcoleta, a Deputy Speaker, said these discrepancies began to appear in ABS-CBN's financial records after Big Dipper's registration as a Philippine Economic Zone Authority (PEZA) locator in 2009.
“Sarili po ninyong financial statements ito, hindi ko po ginawa ito (This is based on your own financial statements, this is not my doing),” he said.
Being a PEZA locator, the supposed digital content provider is given tax breaks by the government for the purpose of pump priming the economy through job generation.
However, PEZA director-general Charito Plaza bared during Marcoleta's questioning that Big Dipper only employed 164 people.
“Kaya natin sila binibigyan ng incentive by way of tax kasi may contribution sila sa economy (We give them incentives by way of tax because of their contribution to the economy),” Marcoleta said before commenting, “164 jobs lang pala (So we're just talking about 164 jobs).”
But Marcoleta argued that Big Dipper doesn't even qualify as a locator because it has no product to speak of. On top of this, it primarily does business with another ABS-CBN-owned entity, albeit registered abroad.
“Pinakikita nga namin dito, it is not a producer of a product. At hindi siya exporter within the meaning of international commerce. Sapagkat iisa lang ang kanyang kliyente, ito yung ABS-CBN 100 percent-owned, na naka lista sa Hungary. Ang ginagawa lang niya is magbenta sa sarili niya (What we're showing here is, it is not a producer of a product. And it is not an exporter within the meaning of international commerce. Because it only has one client, ABS-CBN's 100 percent owned company in Hungary. What it does is sell to itself),” he said.
ABS-CBN Global Hungary Kft is a wholly owned subsidiary of ABS-CBN based in Budapest, Hungary.
ABS-CBN Chief Financial Officer (CFO) Ricardo Tan said it was “misleading” for the solon to say that the corporation was selling to itself.
“ ultimate customers po are the Filipino and non-Filipino audience around the world. Yung Hungary po licenses the content to other companies around the world, which then redistributes it by forging agreements in their respective jurisdictions,” Tan said.
Cavite 7th District Rep. Jesus Crispin Remulla described the set up between the parent company, ABS-CBN Corporation and Big Dipper as a case of “placing the money in your left pocket to your right pocket.”
Marcoleta stressed: “Big Dipper was basically used as a subterfuge to cover up earnings and be taxed at a lower rate. This is my assumption, kasi napakalaki po nung group revenue kung ikukumpara doon sa parent (This is my assumption because compared to the parent's revenue, the group revenue is quite huge).”
“Kung napakalaking ganito po, iisa lang talaga maiisip namin dito na talagang may nangyaring takipan dito (If it's that huge then we can only think that there's a cover up going on),” he added.
Aldrin Cerrado, another network CFO, maintained that Big Dipper's operations were above-board.
“Gusto ko lang pong sabihin na wala po kaming tinatago at hindi po namin ginamit ang Big Dipper para mag-avoid ng taxes (I just want to say that we are not hiding anything and that we are not using Big Dipper to avoid paying taxes). As a matter of fact po, it is disclosed in the financial statements and it's available on our website and its filed with the SEC (Securities and Exchange Commission) and PSE (Philippine Stock Exchange),” he said.