NIRC Tax Research Journal Vol XXV.6 November-December 2013 Top Corporate Taxpayers in the Philippines for Taxable Years 2009-2011 I. INTRODUCTION The Bureau of Internal Revenue (BIR) published in its website the Top 500 Non- Individual Taxpayers for taxable years 2009-201 1. The ranking was based on the amount of income taxes paid as reflected in the tax retums submitted by the companies to the BIR. The profile of the top taxpayers was analyzed, their effective tax rates (ETRs) were computed and the BIR list matched with the Business World (BW) list of Top Corporations in the Philippines, the ranking of which was based on gross revenue. The matching of the BIR and BW lists was done with the end in view of identifying top corporations which are consistently included in the BW ranking but not listed among the top taxpayers; hence, may be flagged for audit by the BIR. Il. PROFILE OF TOP 500 CORPORATE TAXPAYERS: 2009-2011 A. Top 500 Corporate Taxpayers, by Industry: 2009-2011 The Top S00 Corporate Taxpayers in 2011 were engaged in various activities, majority (25%) of which belong to the Manufacturing industry, followed by Wholesale and Retail Trade (15%); Financial and Insurance Activities (14%); Real Estate Activities (11%) and Electricity, Gas, and Water (7%). The remaining top taxpayers were engaged in Transportation and Storage, Information and Communication and Administrative Support Activities, among others. A more or less similar distribution of top taxpayers by industry is observed in 2009 and 2010. (Table 1) * Prepared by Ms. Josefina Manuela A. Eseuro, Economist Ill and Ms. Eva Marie T. Nejar, Economist 11, reviewed and approved by Ms. Monica G. Rempillo, Economist V, Economics Branch, NTRC. Top Corporate Taxpayers in the Philippines for Taxable Years 2009-2011 TNIRC Tax Research Joural Vol. XXV.6 November-December 2013 Table 1. DISTRIBUTION OF TOP 500 CORPORATE TAXPAYERS BY INDUSTRY: 2009-2011 2008 2010 20m | npustay Noweeor | poxcexr | Taxravins | os tiantron ‘Aeakre 4 7) Maing 10 200 Manaficurng iP 2680 [ectisiy, Gas and Water * 680 (Consmcton 15 300 |Whoesale and Reta Trade « 1320 |Acceramodation and Food Senize Activities 5 Lo [Transporatin an Storage 3s 7.00 formation and Comnication 18 30 [Prunciatand Insurance Actiis 6 13.0 Real state Actives e re Professceal siete and technical activities 0 200 |Acminsratve and suppor acts 6 320 \Oters a 40 TOTAL 30a) 100.00 Source: BIR. B. Top 500 Taxpayers’ Income Tax Payments by Industry: 2009-2011 The Top 500 Corporate Taxpayers paid a total income tax amounting to PhP144.5 billion in 2011 which accounted for 43 percent of the corporate income tax (CIT) collection of the BIR during the year. Their shares to total CIT collection were higher at 46% and 45% in 2010 and 2009, respectively. Of the amount paid in 2011, the top taxpayers in Manufacturing sector contributed 28%; Electricity, Gas and Water (15%), Information and Communication (13%); Real Estate Activities (8%); Mining (7%); Wholesale and Retail Trade (7%); Financial and Insurance Activities (6%) and other industries, 16%. The same industries contributed the bulk of the income tax collection in 2009-2010. (Table 2) Top Corporate Taxpayers inthe Philippines for Taxable Years 2009-2011 |NIRC Tax Research Journal Vol. XXV.6 November-December 2013 Table 2. TOP 500 CORPORATE TAXPAYERS’ INCOME TAX PAYMENTS BY INDUSTRY: 2009-2011 (Amounts In Million PhP) a Fo INDUSTRY . a scomeraxram],,TCET | ascovmrax ra a, Reese Ta] on wore] 0a | Mining 6016.96 54 9026.34 7.05 10,629.09 1.36 | Manufacturing 3193.34] 27.19 3940086] 30.77 39,986.02] 27.68 ers, Gs and Weer 1es7506| 144s isasa76] 128 isms | 1674 |consatin user] 097 isos] 145 veenas) 17 Whoksaie wn Red Trade saissi| 556 sons] 675 roms] 693 Accomatin and Food Serve Acie esi] 086 ‘sss 083 asic} 1.03 rnspertin an Stage sana] 425 67630] 526 si28] 428 nfernatn an Conmneaton w60r] 1599 size] 1525 vease7r| 1266 [rene nd insruce Actes esr] 92s resisa| «21 934585] 67 Rest Este Actes saolat| 705 saris] 739 nase] 721 Protas sce and techn actos 16520] sr ras] 038 an [Adminsttive and upp acts ssssz2} 19 aemse| 208 269 loners imst| 67 ssm26|__4ss Pra Torr Trazaeas| 100.00 Ta t18.16 | 100.00 Toe.00| The Top 10 Corporate Taxpayers and their corresponding income payments in 2011 are presented in Table 3. Top 10 Corporate Taxpayers for Taxable Year 2011 Table 3. TOP 10 CORPORATE TAXPAYERS AND THEIR INCOME TAX PAID FOR TAXABLE YEAR 2011 Income Tax Paid Rank Corporate Taxpayer eS 2009 | 2010 | 2011 7 T [1 [1 | Smar Communications, incorporated 1024 8 = 2 Manila Electric Company (MERALCO) 3.30 7_|_3[3 _| Shell Philippines Exploration, B.V. 6:39 3_|~2 [74 | Chevron Malampaya LLC 631 S| 4 [5 | Restle Philippines, Ine. 4.89 ] 4 5. 6 ‘San Miguel Brewery, Inc. 4.78 | 2_|_6 [7 _[ Globe Tetecor, tne 452 9 [16 _[—# | PPC, Ine. 37 | T10_ | 40| 9 | Petron Corporation 2.62 | 10_[ 8 | 10 | SM Prime Hoidings, Tne 233 j ‘Not among the Top 500 Corporate Taxpayers Source: BIR, Top Corporate Taxpayers in the Philippines for Taxable Years 2009-2011NIRC Tax Research Joumal Vol. XXV.6 November- December 2013 Smart Communications, Inc. consistently landed as the top taxpayer in 2009 to 2011. MERALCO which ranked 2nd in 2011 and 8" in 2009 was not among the top 500 taxpayers in 2010. On the other hand, PMFTC, Inc. landed No. 8 in 2011 and No. 16 in 2010 while prior to the merging of Philip Morris, Inc. and Fortune Tobacco Corporation in 2010, the latter was No. 9 in 2009. Furthermore, Petron which ranked 9" in 2011, slid to 40™ in 2010 and 110" in 2009. ‘Top 10 Corporate Taxpayers’ Income Tax Payments: 2009-2011 The Top 10 Corporate Taxpayers paid a total income tax amounting to PhPS3.98 billion in 2011, up from over PhP40 billion in 2009 and 2010. Their income tax payments in 2011 accounted for 37% of the total income tax paid by the Top 500 Corporate Taxpayers or 16% of the total CIT collection during the year. In 2009 and 2010, the Top 10 Corporate Taxpayers contributed 35% and 31% of income tax payments of the Top 500 Corporate Taxpayers, respectively, and 16% and 14% of total CIT collection during the same period. Table 4. SHARES OF THE TOP 10 CORPORATE TAXPAYERS TO INCOME TAX PAYMENTS OF CORPORATIONS: 2009-2011 (Amounts in Billion Pesos) Particulars - 2009 2010 2011 Tacome Tax Payments Top 10 Corporate Taxpayers 40.26 40.17 53.98 L Top 500 Corporate Taxpayers 114.74 128.12 144.47 Total Corporate Income Tax Collection 254.37 280.04 337.44 % Share of Top 10 Taxpayers to ‘Top 500 Taxpayers’ Income Tax Payments 35% 31% 37% Total CIT Collection’ 16% 14% 16% E. Effective Tax Rates (ETRs) of Top 10 Corporate Taxpayers The ETR or ratio of income tax paid to gross revenue in 2009-2011 of the Top 10 Taxpayers is presented in Table 5, 4 : Top Corporate Taxpayers in the Philippines for Taxable Years 2009-2011[NTRC Tax Research Journal Vol. XXV.6 November-December 2013 | Table 5. EFFECTIVE TAX RATES (ETRs) OF THE TOP 10 CORPORATE TAXPAYERS: 2009-2011 Rank Corporate Taxpayer ETRs (%) 2009 | 2010 | 2011 2009 | 2010 | 2011 7. 1 |__| Smart Communications, Incorporated 13,_|_13 121 8 52 2_| Manila Electric Company (MERALCO) ay 3 7 3__| 3 _| Shell Philippines Exploration, B.V. 120 | 20 23 3_|_2 | 4] Chevron Malampaya LLC Lis) 19 [24 5 4 3” [Nestle Philippines, inc. —_ [4 5 =| a 5 6 _| San Miguel Brewery, Inc. C7 8 8 2 | 6 | 7 _| Globe Telecom, Inc. [10 3 8 9 [168 _[ PMFTC, in 6 | 2 5. 110 | 40 9 _| Petron Corporation _ ne J or T 10 8 10 | SM Prime Holdings, Inc. 12 i i * Not among the Top 500 Corporate Taxpayers. 9 Less than 1%. Shell Phils. Exploration, BV registered the highest ETR of 25% in 2011, up from 20% in 2009 and 2010. This was followed by Chevron Malampaya LLC with an ETR of 24%, up from 19% in 2009 and 2010, Meanwhile, Smart Communications, Inc. and SM Prime Holdings. Inc. recorded moderate ETRs of 12% and 11% in 2011, respectively, slightly lower than their ETRs in 2009 and 2010. On the other hand, Petron posted the lowest ETR of 1% in 2011, 0.30% in 2010 and 0.10% in 2009. MERALCO likewise registered very low ETR of 3% in. 2011 and 2% in 2009. These imply that while some top taxpayers contributed as much as a quarter of their gross sales receipts as income tax in 2009-2011, others shared only 1-3% during the period. F. Top Corporate Taxpayers With Very Low ETRs It may be worth mentioning that corporations registered with the country’s Investment Promotion Agencies (IPAs), specifically the Board of Investments (BOI) and the Philippine Economic Zone Authority (PEZA) may have low ETRs due to the fact that they enjoy income tax holiday (ITH) and/or subject to the 5% special tax on gross income in lieu of national and local taxes. Below is a list of 20 Top Taxpayers with very low ETRs in 2009-2011 and may therefore be flagged for audit. Top Corporate Taxpayers fn the Philipines for Taxable Yours 2008-2011 5NIRC Tax Research Journal Vol. XXV.6 November-December 2013 | ‘Table 6. TOP CORPORATE TAXPAYERS WITH VERY LOW ETRs: Eifective Tax Rates (%) BIR Na us ation Ranking ee aia 2009 [2010 [2081 415 _| Philippine Aitnes, In. | scheduled Air Transport o.1s_| 029 | 0.06 300_| Cebu Air, nc.* | Scheduled Air Transport ne | na | a6 315 | Robinson’a Supermarket Retail in Non-Speciaized Stores: Food, 032 | 027 | 027 Corporation Beverage, Tobacco | 441 | Wilmar Edible: ‘Wholesale on a Fee or Contract Basis A 033 | 028 Ine. 345__| Honda Philipines, ine.** Manufcture of Motoreycles o27 | 029 | ox 285 | Accenture ine.* Business and Management Consultancy o2s | na | 034 457 | Team Energy Corporation Generation, Collection and Distribution of | 214 | 036 | 0.36 363__| nine Monite Phils, ine. _| Teteommunications na | na | 037 355__| tiguigae Philippines Com. | Wholesale of Sold, Liguid, Gaseous Fuei__| 1.00 | 079 | 042 285 | Pepsi-Cola Products Pitippines | Manufacture of Soft Drinks uss | ass | 092 ine | 334 _| PrTPhitippines Comporion | Wholessleof Solid, Liquid, GacousFuel | na | 022 | 043 247 | Ginebra San Migual ne Disiing Recivng BendngotSpinis [| as | 1s | owe 419 | Watsons Pewonal Care Stores | Reta: of Pharmaceutical, Medica, Cometic | 055 | 055 | 047 Philippines 425 | Viena Development Corporation | etal n Non-Specaized Stores, oa | oso | a4 {Deparment Sse) 10s | Coca-Cola Batters Philippines, | Manufacture of Sot Drinks 130 | 04s | 050 Ine. 346] BDO Unibank ne. FCDU | Expanded Commercial Banking (Universt | na | 163 | 056 61__| Chevron Pitippnes ine. Manufacture of Other Fuel Produts 036 | 099 | 059 4410 | Foodspiers, ne. | produeion, Procesng.roeevingof | aa | na | om | Maven Produce | 51 | San Miguel Foods, ne. Production, Processing, Preserving of o2s | ose | a7 Meat/Meat Products 224 | SM Man, Ine. Retail in Non-Specialized Stores 072 | 098 | 075 (Department Stores) * BOLregistered firm ‘** PEZA-registered company 6 Top Corporate Taxpayers in the Philippines for Taxable Years 2009-2011NIRC Tax Research Journal Vol. XXV.6 November: December 2013 Also, a comparison of ETRs among top corporations engaged in similar activities shows that the ETRs varied and each taxpayer registered erratic ETR year by year. (Table 7) Table7. ETRs OF SELECTED TOP CORPORATE TAXPAYERS ENGAGED IN THE SAME LINE OF BUSINESS: 2009-2011 BIR caaieareaina Effective Tax Rates (%) Ranking ee 2009 | 2010 | 2011 347__| Ginebra San Miguel, Inc. oas | isa | 048 68__| Tanduay Distillers, Inc. oo4 | 298 | 3.20 26 ‘Emperador Distillers, Inc. 090 | 6.39 5.08 207 | Asia Brewery. Ino. 373 | 105 | 121 6 _| San Miguel Brewery, Inc. oz | 753 | 8.13 295 | Pepsi-Cola Products Philippines, Inc. 169 | 095 | 0.42 105 | Coca-Cola Bottlers Philippines, Inc. 130_| 048 | 0.50 380 | Dole Philippines, Ino. 026 | 030 | 0.19 161__ | Del Monte Philippines, Ine. ais_| 149 [0.85 235 | The Philippine Daily Inquirer, Inc. 333 [na 3.51 258 | Philstar Daily, inc. 2s1 | 31s | 352 403 _| Pilipino Star Prg. Co, ine. na | 8.29 | 8.97 315__| Robinson's Supermarket Corporation o32_| 027 | 027 152 _| Philippine Seven Corporation ais | 143 [1.52 224 | SMMar, inc. or | 098 | 075 419 | Watsons Personal Care Stores Philippines oss | oss | 047 36__| Mercury Drug Corporation 068 | 0.69 | 0.86 95 __| Jollibee Foods Corporation 105 | 089 | 1.00 311 __| Freemont Foods Corporation na, 1i4_| 1.37 379 | International Family Food Services, Ino. aa | iso | 174 | 200 | Mang Inasal Philippines, Ine. na | na 1.86 79 | Golden Arches Development Corporation 223 [380 | 3.02 | 168 _| Philippine Pizza, Inc. 157 _| 238 | 330 363__| Digitel Mobile Phils. Inc. na | na 037_| 15 Philippine Long Distance Telephone Company 1.00, 1.31 330 | 7___| Globe Telecom, ne. sa | 759 | 7.60 1 ‘Smart Communications Incorporated 12.58 | 1291 | 11.89 156 | ABS-CBN Corporation 3a5_| 720 | 1.07 (‘s2 [ema Network, Ine. waz_[ on | 5.12 * n.a, — Not included in Top 500 Taxpayers or no data available on gross sales. (Rap Corporate Taxpayers in the Philippines for Taxable Years 2009-2011 7NTRC Tax Research Journal Wal XXV.6 November December 3013 ] Ill. BW LIST OF TOP CORPORATIONS IN THE PHILIPPINES VIS-A-VIS BIR LIST OF TOP 500 TAXPAYERS: 2009-2011 Matching of the BW list of the Top 500 Corporations (based on gross revenues) with the BIR list of Top 500 Taxpayers shows that for the years 2009, 2010 and 2011, there were 281 corporations, 291 corporations and 273 corporations, respectively, or an annual average of 281 corporations, which were in the BW list of Top 500 Corporations but were never in the BIR’s lists of Top 500 Corporate Taxpayers for the same years. Out of the said corporations, 146 consistently landed in the BW lists ftom 2009-2011 but were not among the Top 500 Taxpayers during the 3-year period. It may be noted that some Top Corporations were identified to be registered with the BOI or PEZA and therefore entitled to income tax holidays (ITH) and/or subject to 5% of gross income in lieu of all national and local taxes; hence, a number of these companies were not among the Top Taxpayers during the 3-year period under review. Among the Top Revenue Grossers per the BW list but are not among the BIR list of Top Taxpayers include the following: ‘Table 8. BW LIST OF TOP CORPORATE REVENUE GROSSERS IN THE PHILIPPINES BUT WERE NOT INCLUDED IN THE BIR TOP 500 CORPORATE TAXPAYERS: 2009-2011 Rank (BW Top Corporations in the Philippines) Corporation Name Industry Classification 2009 | 2010 | 2011 - | - 4 | TL@Philippines), tne. ‘Manufacture of Semi-Conductor Deviees and Other Electronic Components 2 | 6 7__| Malayan Integrated Industries Corp. Manufacture of Rough Lumber 13 | 15 | 9 | Toshiba information Equipment (Philippines), | Manufacture of Computers and Peripheral Ic. Equipment and Accessories - | 9 | 10. | Phitippine Associated Smelting and Refining | Non-Ferrous Smelting and Refining, Except Comp.* Precious Metals, 28 | 25 | 22 | Sunpower Philippines Manuficturing Lud* | Manufacture of Semi-Conductor Devices and Other Electronic Components 20 | 17 | 25 | Samsung Electronics Philippines Manufacture of Computers and Peripheral Manufecturing Corp." Equipment and Accessories - fo: 27, | HHIC-PHIL, Ine. | Building of Ships and Boats Other Than Sports and Pleasure Boats 460) = | 32. | Aboitie Power Corp, Electricity, Gas, Steam and Air Conditioning Suppl - | = | 42 | Total Paitippines) Comp Retail Sale of Automosive Fuel in Specialized | Stores | - [<7 ae | eetech attiance Holdings ne nual Chawsercial Boaiing (Univeral L Banking 3 Top Corporate Taxpayers in the Philippines for Taxable Years 2009-2011‘NERC Tax Research Journal Vol. XXV.6 November-December 2013 Rank (BW Top Corporations ee In the Philippioss) ‘Corporation Name Industry Classification | 10 | 201 | 38 | 42 | 45 | ThePhilippine American Life and General | Life Insurance Insurance Co. 476 | 90 | 49 _| ‘Travellers international Hotel Group, Ine* | Hotels and Motels a ar | - 53.) PH-O-B-N-I-X Petroleum Philippines, Ine. | Retail Sale of Automotive Fuel in Specialized Stores - | 52. | 56 | ROHM Electronics Philippines, Inc. Manufacture Of Semi-Conductor Devices And Other Electronic Components af 58 _ | Amkor Technology Philippines, Inc.* Manufacture Of Semi-Conductor Devices And Other Electronie Components 60_| 57 | 59 _| Maynitad Water Services, Inc Wholesale Collection, Treatment and Supply _| 76 | s6 | 64 | Samsung Electro-Mechanies Philippines Manufacture Of Semi-Conductor Devices And Comp. Other Electronie Components 7 | 81 | 67. | PIT Philippines Trading Corp. Wholesale OF Solid, Liquid And Gaseous Fuels And Related Products . =| 68 | Energy Development Corp. | Electricity, Gas, Steam and Aie Conditioning | Suppiy. 9s | 77 | 69. | Semirara Mining Corp, Mining of Hard Coal * PEZA registered company. Iv. RECOMMENDATION Based on the foregoing findings, it is recommended that top revenue grossers with very low ETRs and corporations engaged in the same line of business but with incomparable ETRs be flagged for audit by the BIR. Top Corporate Taxpayers in the Philippines for Taxable Vears 2009-2017