Pagcor appeals to BIR to soften stance on taxes

MANILA, Philippines - The Philippine Amusement and Gaming Corp. (Pagcor) is appealing to the Bureau of Internal Revenue (BIR) to soften its stance on the taxes slapped on Pagcor and its licensees.

In a telephone interview with The STAR, Pagcor chairman Cristino Naguiat said he met with BIR Commissioner Kim Henares on Friday to clarify the issue.

“We will appeal the circular,” Naguiat said, referring to BIR Memorandum Circular 33-2013, which states that all earnings of Pagcor from its operations are subject to corporate income tax.

The circular ended a long-standing debate on whether or not Pagcor must pay corporate income tax.

Its contractors and licensees such as the giant casinos in Pagcor’s much-touted Entertainment City and private poker clubs frequented by high rollers are subject to the tax as well, the Circular also said.

In Memorandum Circular 33-2013, issued early this month, the BIR clarified the income tax and franchise tax due from Pagcor.

“Pagcor is no longer exempt from corporate income tax as it has been effectively omitted from the list of government-owned or controlled corporations that are exempt from the payment of the income tax,” the BIR said, noting that Republic Act 9337 or the Expanded Value Added Tax Law removed Pacgor from the exempted GOCC list.

Pagcor, under the former administration, has questioned before the Supreme Court the constitutionality of its removal from the list.

However, the Court denied Pagcor’s petition in April 2011.

The BIR thus clarified that Pagcor is subject to income tax, particularly its income from casino operations, dollar pit operations, regular bingo and mobile bingo operations.

Also subject to income tax are income from other related operations such as Pagcor’s 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.

In a separate interview, Henares said the BIR has not received any formal appeal yet but noted that the tax bureau would study Pagcor’s position.

“We have not received any position paper yet so there is nothing to study,” she said over the weekend.

Among the options Pagcor is looking at is to appeal for a non-retroactive application of the circular.