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BIR settles with ABS-CBN over P31M tax deficiency

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by Allan Yves Briones

ABS-CBN Film Productions, Inc. will be paying the Bureau of Internal Revenue (BIR) P16.1 million in a compromise agreement over a reported P31 million tax deficiency from 2009.

In a 16-page decision promulgated July 31, the Court of Tax Appeals First Division approved the settlement agreement between ABS-CBN and BIR.

“The Judicial Compromise Agreement entered into by the parties is hereby approved and this Judgement on Compromise Agreement is hereby rendered in accordance therewith. The parties are hereby enjoined to faithfully comply with all the terms and conditions of the aforesaid Compromise Agreement,” the court ruled.

The P16.1 million was calculated to be 40 percent of the basic income tax and basic value added tax, in addition to 100 percent of the expanded withholding tax and basic withholding tax on compensation, and basic documentary stamp tax.

According to the decision, the settlement was granted in part due to the “doubtful validity” of BIR’s tax assessment. In addition, a memorandum submitted by ABS-CBN presented evidence that the tax assessment was not based on fact, “but mere presumptions.”

The court found that the BIR failed to demonstrate that ABS-CBN received taxable income equivalent to the tax deficiencies.

“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 decision read.

The decision was wrote by Presiding Judge Roman G. Del Rosario, and Associate Justices Esperanza Fabon-Victorino and Catherine Manahan. #

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