PARTLY FALSE: First Philippine Holdings ‘made P24.6B profit, but only paid P10M income tax’

Claim: First Philippine Holdings (FPH) Corporation earned P24.6 billion in 2019 but paid only P10 million in income taxes.

The asianpolicy.press published a blog post titled, “Another Lopez firm made P24.6B profit, but only paid P10M income tax” by Victor C. Agustin. The post did not specify a date published.

It said that FPH Corporation, which is owned by the Lopez family, received a P24.6 billion net income in 2019 but paid P10 million only in corporate income taxes.

The decrease, he said, was due to a line item called “share in earnings/losses from investments in and deposits to subsidiaries and associates,” which was deducted from the original P3.8 billion income tax due.

According to CrowdTangle, this post has received 5,061 interactions on Facebook, consisting of 3,646 reactions, 350 comments, and 1,065 shares. CrowdTangle says it was shared as early as Tuesday, May 19.

Rating: PARTLY FALSE

The facts: Comparing FPH Corporation and its subsidiaries’ net income with the income tax of only FPH Corporation as a holding company is misleading.

FPH and its subsidiaries earned a net income of P24.619 billion in 2019, according to their annual report. This was after they paid a consolidated income tax of P5.175 billion, which was deducted from a consolidated income of P29.494 billion.

FPH, as a parent company, earned by itself a net income of P12.851 billion in 2019. This was after they paid an income tax of P10 million, which was deducted from their income of P12.861 billion.

The P10 million income tax of FPH is explained in the audited financial statement provided in the same annual report. The auditing company did not note anything out of the ordinary in terms of the company’s income taxes.

According to accounting and taxation expert Mon Abrea, external auditors include this note on income taxes in a financial statement to show the reconciliation between the financial income and taxable income.

Asian Policy’s post was originally published in the print version of the Philippine Star on May 19 as an opinion piece by Victor Agustin. This was not published on Philstar.com.  

FPH CFO Emmanuel Singson later responded to Agustin in a column also published in the Philippine Star on Wednesday, May 27, explaining:

“As a parent holding company, the bulk of FPH’s income includes share in earn­ings (losses) of subsidiaries and associates and dividend income from domestic corporations (which are non­taxable/exempt), and interest income (which is subject to final tax), under the National Internal Revenue Code (NIRC).

“Under our tax laws, the government does not impose income tax on these types of earnings at the holding company level because they have already been subjected to income tax at the subsidiary level.”

As such, these were deducted from the original P3.858 billion statutory income tax, resulting in the P10 million amount shown in the auditor’s note. – Vernise L Tantuco/Rappler.com