PAGCOR lowers gambling license fees at Entertainment City

The Philippine Amusement and Gaming Corporation (PAGCOR) has temporarily lowered the license fees to be paid by gambling casinos at Entertainment City in Pasay.

 

This development comes a year after the Bureau of Internal Revenue (BIR) slapped a 30-percent income tax on gambling casinos.

 

In a joint statement disclosed to the Philippine Stock Exchange, Travellers International Hotel Group Inc., Bloomberry Resorts and Hotels Inc., MCE Leisure (Philippines) Corporation, and Tiger Resorts Leisure and Entertainment Inc. noted they have entered into an agreement with PAGCOR to adjust the license fees by 10 percentage points of gross gaming revenues effective April 1, 2014. 

 

Prior to the agreement, operators of gambling casinos in Entertainment City were supposed to pay license fees equivalent to 15 percent of gross gaming revenues from high roller tables and junket operations and 25 percent on gross gaming revenues from non-high roller tables, slot machines and electronic gaming machines.

The fees were reduced to 5 percent for high roller tables and junket operations, and to 15 percent for non-high roller tables, slot machines and electronic gaming machines.

 

The deal is "a mutually beneficial and practical solution to address the additional exposure to corporate income tax" imposed by the BIR last year, the statement noted.

 

In April 2013, the BIR issued a memorandum circular tasking PAGCOR and its licensed casino operators to pay a 30-percent corporate income tax instead of the 5-percent franchise tax on gross gaming revenues.

 

The bureau noted this was the consequence of Republic Act 9337, or the Expanded Value-Added Tax Law, which removed PAGCOR from the list of government-owned or -controlled corporations exempt from corporate income tax.

 

PAGCOR's income from casino operations, dollar pit operations, regular bingo operations and mobile bingo operations with agents on commission basis were all subjected to tax.

 

"Such solution not only preserves for the Philippine Government (i.e., PAGCOR and BIR) 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 License," the joint statement read.

 

However, the adjustment is only temporary to address the BIR action until it is "restrained, corrected or withdrawn.

 

"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," the statement read.

 

PAGCOR and the casino operators also said the agreement "is not an admission of the validity" of the BIR memorandum "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 a separate statement, Clarence Chung, chairman and president of Melco Crown Philippines shared his view on this development.

 

“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," he said.

 

“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. 

 

PAGCOR is expecting at least $5 billion in investments by casino operators in Entertainment City, covering the development of at least 3,200 hotel rooms and the creation of at least 80,000 direct and indirect employment. – Danessa Rivera/VS, GMA News