ABS-CBN lawyer defends Big Dipper, explains services can be exported under the law

Metro Manila (CNN Philippines, July 2) - One of the lawyers of ABS-CBN Broadcasting Corporation said that services, along with physical goods or items, can be exported as provided by the law.

Tax attorney Othello Carag made the statement after a lawmaker questioned the compliance of ABS-CBN's subsidiary, Big Dipper Digital Content and Design Inc., with the Philippine Economic Zone Authority (PEZA) as it only offers digital services and does not produce products.

“I think there is an impression that only physical goods can be exported, but under our laws even services can be exported and that is provided under the PEZA law and even the Tax Code,” said Caraga during the continuation of the inquiry on ABS-CBN's legislative franchise at the House of Representatives.

He added that it is also covered under Resolution No. 00411 that was passed by PEZA law.

"It allowed the registration of information technology enterprises," he said. "So it can provide IT services abroad. These are not physical products, but in the form of services.”

Carag noted that business process outsourcing services are considered exports as companies that offer them are entitled to incentives under the Special Economic Zone Act by PEZA.

PEZA Director-General Charito Plaza already said on Tuesday that Big Dipper is registered with the agency and has complied with requirements concerning tax payments.

Big Dipper repurposes contents produced by the broadcasting network into various formats for different markets. ABS-CBN group chief financial officer Ricardo Tan explained that the repurposed contents are licensed by the subsidiary in Hungary for foreign buyers.

For his part, Sagip Party-list Rep. Rodante Marcoleta has claimed that ABS-CBN is using Big Dipper as tax-avoiding scheme.

ABS-CBN has flatly denied it and said that it paid P71.5 billion in taxes from 2003 to 2019.

“We are not selling to ourselves and that is misleading to say that," Tan said. "Because the ultimate customers are the Filipino and non-Filipino audiences around the world. Yung Hungary po licenses the content to other companies around the world."

He added, “That's how Hungary is able to generate foreign exchange which it then pays to the Big Dipper.”