Razon hopes tax issue dogging Pagcor, gaming firms will be resolved this year

The issue regarding the 30-percent income tax slapped on Philippine Amusement and Gaming Corp. (Pagcor) and its licensees by the Bureau of Internal Revenue (BIR) will be resolved within the year, hopefully in the gaming industry's favor, Bloomberry Resorts Corporation chairman Enrique K. Razon said Monday.

However, Razon noted that the income tax provision will not deter investment in the country's gaming industry.

The tax dispute "will be resolved before the end of the year. If it will not be resolved with Pagcor...hopefully it gets resolved in the executive department," Razon told reporters on the sidelines of the company's annual stockholders' meeting Monday.

"Hopefully it will be on our favor but I don't think income tax will deter investments. We've made our investment. We're willing to do it. I think others are as well," he also said.

On April 23, the BIR issued a memorandum circular saying Pagcor and its licensed casino operators are subject to the 30 percent corporate income tax instead of the 5 percent franchise tax on gross gaming revenues.

This stemmed from the enactment 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.

Subject to income tax are Pagcor's income from casino operations, dollar pit operations, regular bingo operations and mobile bingo operations with agents on commission basis.

Income from other related operations includes, but is not limited to, income from licensed private casinos covered by authorities to operate; income from traditional bingo, electronic and 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.

Earlier, Bloomberry disclosed that the Pagcor licensees are meeting to discuss and prepare a collective response to the new BIR rule.

"Of course we have provisions in the license covering this but discussions are ongoing. We think we are very much protected in the license agreement so we are somewhat optimistic," Razon said after the stockholders' meeting.

Bloomberry also said it is determining how the change from 5 percent franchise tax on gross gaming revenues to 30 percent corporate income tax on net taxable income will affect its operations.

Bloomberry operates Solaire Manila Resort & Casino in Pagcor's Entertainment City and is currently expanding the development, with the P20.5 billion Phase 1-A expansion expected to be completed in the third quarter of 2014. — BM, GMA News