BUSINESS

Pagcor amenable to shouldering heavy load of 30 percent tax

TAGs: bureau of internal revenue, Casino News, gambling, PAGCOR, Philippines

BIR-curveball-pagcor-licensesThe Philippine Amusement and Gaming Corporation’s ongoing tussle with the Philippines’ Bureau of Internal Revenue may have hit a watershed moment after the former seemingly expressed acquiescence to the latter’s decision to slap additional tax burdens on Pagcor’s licensees.

Consider this a huge victory for the BIR, who stood firm on its position to impose a 30 percent corporate income tax bill on the agency and its licensees. Pagcor initially filed an appeal seeking clarification on the BIR’s ruling (Memorandum Circular 33-2013) on the issue.

As far as Pagcor and its licensees were concerned, the understanding was that they would only have to pay the 5-percent franchise tax on their gross gaming revenue, as well as 15 percent gaming revenue taxes on VIP gambling and 25 percent on mass-market gambling.

But the BIR hunkered down its anchor and wasn’t willing to budge on any discussions, forcing Pagcor and its licensees to rethink its options, one of which would involve the gaming regulator and its licensees coming up with a burden-sharing scheme to account for the 30 percent corporate income tax

”We can’t pay the whole 30 percent income tax,” Jorge V. Sarmiento, Pagcor president and chief operating officer, recently told reporters. “We asked them how much they can agree with us on the amount if the BIR decides not on their favor. We can help them.”

It does sound like Pagcor’s willing to bite the bullet and carry the burden of shouldering a significant portion of the 30 percent corporate income tax. It’s an option that’s well within its means but never really considered until the BIR hammer fell swiftly before hitting the agency and its licensees squarely on the nether regions.

Sarmiento stopped short of saying that the proposed tax sharing had been agreed upon by all parties. He did say that the agency would be amenable to the plan in an attempt to save the licensees from paying more than what they were promised when they began developing their casinos in the country.

”It [income tax] will have an impact on our licensees because when they came in, it’s only the 5-percent franchise tax in lieu of other taxes, including corporate income tax,” Sarmiento said.

Still, the government agency is still holding on to hope that the BIR will soften its stance on the issue. But in the unlikely event that it doesn’t, Pagcor is still open to having the matter decided by the courts, or even the Office of the President.

Either way, the gaming operator is trying to cover its bases, and if all else fails, it’s amenable to ponying up the money to pay for the income tax to shield the licensees from having to do the same.

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com