The Philippines’ Bureau of Internal Revenue (BIR) wants the Philippine Amusement & Gaming Corp. (Pagcor) to pay corporate income tax after the latter was taken off the list of government-owned or controlled corporations that are exempted from the payment of the income tax as part of the Expanded Value Added Tax Law (Republic Act 9337). The Philippine Star reports that the decision to remove Pagcor off the “no income tax list” was met with objections by the agency’s previous management, who went as far as questioning the decision before the country’s Supreme Court. But that petition was eventually and summarily dismissed.
As per the BIR’s Memorandum Circular 33-2013, Pagcor will be subjected to pay corporate income tax from the money it makes from all of its casino operations and licensing of gambling casinos, gaming clubs and other similar recreation or amusement facilities, gaming pools, dollar pit operations, regular bingo operations, and mobile bingo games that are operated with commissioned agents. As far as the aforementioned agent’s commission is concerned, that will also be subjected to regular income tax on top of the withholding tax that’s already in place under current government regulations.
The BIR also clarified what falls under income from other related operations, of which it included, but did not limited to, income from licensed private casinos covered by authorities to operate; income from traditional and electronic bingo, as well as other bingo variations; income from private Internet casino, gaming, Internet sports betting and private mobile gaming operations; income from junket operations; income from SM demo units; and income from other necessary and related services, shows and entertainment.
While the clarifications by way of the BIR’s memorandum put some clarity on the issue, Pagcor has seemingly been making good on its corporate income tax payments, especially last year when it remitted Php 1.07 billion in corporate income tax, the most its ever sent the BIR’s way in its history. Taking into consideration the franchise tax from its gaming operations and licensees and withholding taxes, Pagcor paid Php 5.5 billion to the BIR in 2012, 10.4 percent more than the Php 4.98 billion it forked over in 2011.
But that number appears to be relatively conservative based on what the government-owned agency is expected to earn in total revenues this year. With a target of Php 44 billion in total revenues, it’s pretty safe to estimate that Pagcor’s total tax payments this year could very well exceed Php 6 billion.