CTA approves PBA, BIR P49-M tax compromise deal

FILE: Court of Tax Appeals of the Philippines located at Agham Road, National Government Center, Diliman, Quezon City in Metro Manila. (Photo By Judgefloro – Own work, Public Domain)

MANILA – A ruling by the Court of Tax Appeals (CTA) has approved a judicial compromise agreement between the Philippine Basketball Association (PBA) and the Bureau of Internal Revenue (BIR) on taxes dating as far back as 1988.

In a 12-page decision dated Sept. 21 written by Associate Justice Juanito C. Castaneda, Jr. and made public Friday, the tax court’s Second Division approved the judicial compromise agreement entered into by PBA and BIR last year and which had required a green light from the CTA.

“Accordingly, this case is now deemed closed and terminated.” the tax court said, adding that the joint motion for judgment based on compromise agreement filed on Sept. 11, 2019 is granted.

The BIR originally issued formal assessment notices (FANs) and formal letters of demand (FLDs) to PBA in 2003 for the years 1988 to 2000, assessing the league with a deficiency of PHP532.7 million inclusive of interests and surcharges.

Availing of a voluntary assessment and abatement program, the PBA paid PHP23 million as part of its offer of a compromise settlement of 15 percent of the basic deficiency percentage taxes in 2003.

After negotiations, the BIR accepted an improved compromise offer from PBA of PHP48.5 million representing 40 percent of all deficiency percentage taxes and all withholding taxes. The sum was paid by PBA in July 2019.

The agreement was signed by Commissioner Willie O. Marcial for the PBA and BIR Commissioner Caesar Dulay.

A hitch in the immediate approval by the CTA initially ensued after the tax court noted unreadable and missing documents such as missing certificates of approval.

Under tax laws, the amounts involved in the compromise must be approved by the evaluation board composed of the commissioner and four deputy commissioners of the BIR.

The BIR and PBA have since complied with all the formalities and requirements, the CTA noted in approving the compromise.

Associate Justice Jean Marie A. Bacorro-Villena concurred.