SUMMARY
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MANILA, Philippines – State-run firm Philippine Amusement and Gaming Corporation (Pagcor) agreed to cut license fees for the 4 casino operators in the Entertainment City in Pasay City as a temporary measure to address tax concerns.
In a statement, Pagcor and the 4 casino licensees said they signed an agreement reducing license fees, as a percentage of gross gaming revenues, by 10% starting April 1, 2014.
They said the agreement was “a mutually beneficial and practical solution to address the additional exposure to corporate income tax brought about revenue circular issued by the Bureau of Internal Revenue (BIR).”
“Such solution not only preserves for the Philippine government the financial benefits that it already derives from the provisional licenses but also validates Pagcor’s commitment to uphold and abide by the terms of the provisional licenses,” their statement read.
The 4 companies operating casino resort complexes in Entertainment City include Travellers International Hotel Group Inc. of Andrew Tan, Bloomberry Resorts and Hotels Inc. of Enrique Razon Jr., MCE Leisure (Philippines) Corporation of the SM group, and Tiger Resorts Leisure and Entertainment Inc. of the group of Japanese gaming mogul Kazuo Okada.
The companies however emphasized that the agreement was only a temporary measure. “The parties agreed to revert to the original license fee structure under the provisional licenses in the event the BIR action is permanently restrained, corrected or withdrawn. Pagcor and the licensees also agreed that the 10% license fee adjustment is not an admission of the validity of BIR RMC No. 33-2013 and it is not a waiver of any of their remedies against any assessment/s by the BIR for income tax on their gaming revenue.”
In April 2013, the BIR ruled that all earnings of Pagcor from its operations and licensing of gambling casinos, gaming clubs and other similar recreation or amusement facilities, gaming pools and other related operations were subject to corporate income tax.
The BIR issued Memorandum Circular 33-2013 to clarify the income tax and franchise tax due from Pagcor, its contractors and licensees after Pagcor was stricken off the list of government-owned or controlled corporations exempted from the payment of the income tax by
virtue of Republic Act 9337 or the Expanded Value Added Tax Law.
With the BIR ruling, Pagcor licensees were also effectively required to pay the 30% corporate income tax on their net taxable income instead of the 5% franchise tax on their gross gaming revenue.
“We welcome this initiative and express our sincerest gratitude to the government of the Republic of the Philippines and Pagcor for their continuous support in helping us realize our gaming, leisure and entertainment complex in Manila,” Clarence Chung, chairman and president of Melco Crown Philippines, said in a statement.
“The development of City of Dreams Manila is progressing well and we firmly believe our integrated leisure and entertainment destination resort will play a key role in furthering the ambitions of the Philippines in establishing the country as a major leisure and tourism destination in the region,” he added.
The Entertainment City project of Pagcor will generate at least US$5 billion in investments from the 4 casino licensees, create at least 3,200 hotel rooms and at least 80,000 direct and indirect jobs. – Rappler.com
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