Bloomberry Resorts chairman Enrique Razon is hopeful that the on-going issue regarding the 30 percent income tax the Bureau of Internal Revenue has levied on the Philippine Amusement and Gaming Corp. and its licensees will be resolved before the year ends.
Talking to reporters earlier this week after the company’s annual stockholders meeting, Razon stopped short of being optimistic that whatever confusion BIR’s ruling had on the Philippine gaming industry would be cleared up sooner than later.
“The tax dispute will be resolved before the end of the year,” Razon said, as quoted by GMA News. “If it will not be resolved with Pagcor…hopefully it gets resolved in the executive department.”
Nevertheless, Razon also said that even if the current provision stands, it likely wouldn’t hinder more investments to come into the growing gaming industry in the Philippines. A lot of companies, including Bloomberry, which owns Solaire Manila, are already dug in on their projects and are prepared to meet the demands needed to see the project through. “We’ve made our investment. We’re willing to do it. I think others are as well,” Razon noted.
That doesn’t mean, though, that the Pagcor licensees, which includes Bloomberry, will just rest on their laurels and accept the BIR’s surprising rule without putting up a fight, especially when these licensees believe that they have the grounds to challenge the ruling imposed by the government agency.
The on-going dispute stems from a recent BIR ruling that called for Pagcor and its licensees to be subject to a 30 percent corporate income tax instead of the 5 percent franchise tax on gross gaming revenues that was initially agreed upon by Pagcor and its licensees before this whole brouhaha caught everyone by surprise. According to the BIR, the imposition of this rule was based on the enactment of Republic Act 9337, or the Expanded Value Added Tax Law, which took out Pagcor from the list of government-owned or controlled corporations that are exempt from paying corporate income tax.
The controversial ruling has caused some concern from local and foreign financial companies who believe that the BIR’s ruling would have serious ramifications on bringing in future investors to the country’s gaming industry. Earlier this week, Fitch Ratings senior director and gaming, lodging and leisure sector head Michael Paladino cited the dispute as a potentially “notable detriment” to the country’s market growth “because the relative tax advantage was supposed to be a notable VIP driver.”
Through it all, Razon remains hopeful that the issue, which is a pretty serious one by any stretch of the imagination, can be resolved within the year. At least that’s the hope.