Following reports that the BIR has filed a tax evasion case against PHD Media Network 2006 Inc. (PMNI), Herminia De Leon (previous CEO) and Rowie Nardo (CFO and Treasurer), the network contends that payments for media suppliers are not part of the taxable base.
“In our ongoing discussions with BIR on this issue, BIR alleged that payments for media suppliers that passed through PHD are part of the taxable base. PHD’s contention is that this is not PHD’s income and therefore not part of the taxable base,” the network said in its official statement.
“The issue on the proper treatment of the payments has been a lingering problem for all advertising and media agencies,” PHD said, noting that under the “Direct Payment Scheme”, advertisers are mandated to issue payments directly to media suppliers.
PHD added that the Direct Payment Scheme was implemented by the BIR in 2012 via BIR RMC 91-2012, acting on the appeal of ad agency practitioners.
According to the BIR, PHD had under declared its taxable income from 2009 to 2011. PMNI, together with its responsible corporate officers, was sued for an aggregate tax liability amounting to P532.6 million, inclusive of surcharges and interests, broken down into: 2009 – P222.95 million (Income Tax – P156.07 million & VAT – P66.88 million); 2010 – P194.45 million (Income Tax – P130.21 million & VAT – P64.24 million); and 2011 – P115.20 million (Income Tax – P71.9 million & VAT – P43.3 million).
PHD said it has asked for the help of a local reputable auditing firm in dealing with the issue. “We reiterate that PHD has always been a responsible corporate citizen and has been diligently paying its taxes following standard industry practices and the tenets of fair assessment and the truth,” PHD said.
The case against PMNI, and its responsible corporate officers is the 257th filed under the RATE (Run After Tax Evaders) program of the BIR under the leadership of Commissioner Kim S. Jacinto-Henares.
Prior to the complaint against PMNI, the BIR also filed complaints against outdoor advertising company JS Dream Ad and marketing communications agency Adformatix.
