NextGen Day

Online news publisher Maria Ressa and Rappler Holdings Corp. (RHC) have been exonerated by the Court of Tax Appeals (CTA) of tax evasion allegations resulting from investments made by two foreign companies.

Ressa was declared not guilty in four counts docketed as CTA Criminal Cases 679 to 682 by the CTA first division in a 90-page ruling dated January 18 “for the inability of the prosecution to prove their guilt beyond a reasonable doubt.”

The court further stated that ownership in the company that would necessitate paying taxes did not automatically result from the use of the financial instruments known as Philippine Depositary Receipts (PDRs) by Rappler to permit investments by the American venture capital firms North Base Media (NBM) and Omidyar Network (OM).

Nothing in the PDR instruments’ and subscription agreements’ wordings, it claimed, “would suggest that the foreign entities NBM and OM will become owners of the shares of stock of Rappler Inc. following the issue of the PDRs.”

The PDR instrument’s paragraph 4 specifies that the issuer RHC will continue to be the owner of the shares of Rappler Inc. (RI) stock.

The PDR holder “only retains an option to purchase the underlying shares of RI subject to specific circumstances, e.g., that there is no law restricting foreign ownership in the business of the operational firm,” according to the court’s ruling on the Rappler agreement.

The first PDR certificate, issued by RHC on May 29, 2015, related to 264,601 shares of RI and was placed in escrow with the agency. RHC awarded PDRs to NBM in two tranches.

In July 2015, it granted NBM the second PDR certificate, which related to 11,764,117 underlying shares in RI.

According to the CTA, RHC’s alleged gain of PHP162,412,783 which was reportedly characterized as trading income had no legal justification.

Meanwhile, Solicitor General Menardo Guevarra stated that they have not yet obtained a formal copy of the decision and will investigate any potential ramifications.

The OSG will undoubtedly analyze the situation with the BIR and the Department of Justice to see whether any additional action is necessary, according to Guevarra.

Organizations in developing nations supported by NBM and OM include those in Indonesia, India, the UK, Mexico, Israel, and Japan.

For the digital media network Vietcetera, which is situated in Vietnam, NBM raised USD 2.7 million in 2021.

Sasa Vucinic, a journalist from Serbia and co-founder of NBM, received funding for the Media Development Investment Fund (MDIF) from businessman George Soros’ Open Society Institute in 1995.

By 2012, the fund has loaned more than $100 million to media organizations working on 200 projects across 30 countries, reaching an estimated 36 million people with its news.

Pierre Omidyar, the creator of eBay, established OM in 2004. It describes itself as a “philanthropic investing firm.” The Wikimedia Foundation, which serves as the non-profit hosting platform for Wikipedia, was one of the organization’s beneficiaries.

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