The ongoing confusion surrounding Pagcor’s “obligation” to pay the 30 percent income tax the Bureau of Internal Revenue is mandating isn’t over yet.
The gaming agency is going back to the Supreme Court, seeking clarification on whether that massive 30 percent corporate income tax bill it has to send to the BIR covers both gaming and non-gaming revenues or just one of the two.
Pagcor chairman Cristino Naguiat is challenging that his agency’s gaming revenues should be deemed hands-off because it’s already sending a franchise tax to the BIR amounting to five percent of the gross earnings from the operation of its franchise. That should be the end of that, Pagcor contends, because on top of that figure, it’s also writing a monthly remittance check to the National Treasury to the tune of 50 percent of its gross earnings from the operation of its franchise. Any more money, it appears, would leave Pagcor with barely enough funds to buy inflated movie tickets.
Ok that last part was a joke, but the issue is far from being funny to Pagcor and its franchises, a lot of whom are now scrambling to determine just how much of a tax dent they stand to face if the BIR has its way. Citing Presidential Decree 1869, or the agency’s legislative franchise, Pagcor pointed out that its gaming and non-gaming revenues are to be taxed differently with the former receiving a five-percent franchise tax on gaming revenues in lieu of any taxes due on the operation of the franchise, whereas the latter is not considered part of the income for the purpose of applying the franchise tax but are considered separate income that is subject to corporate-income tax.
So essentially, that’s what Pagcor is hoping for, that the Supreme Court clarifies that only the agency’s non-gaming revenues, which includes related services, shows, entertainment, and, according to Naguiat, regulatory fees that the agency collects from private casinos authorized to operate its franchise, are the only things subjected to the 30 percent income tax.
The government agency knows full well now that it’s got a 30-percent corporate income tax bill to send to the BIR. What it’s trying to clarify now is where the tax money will come from.
