Tax issue is for Pagcor to sort out, says Okada

MANILA, Philippines - As far as the group of Japanese pachinko tycoon Kazuo Okada is concerned, the tax dispute arising from the removal of the tax-exempt status by the Philippine Amusement & Gaming Corp. is an issue only the local industry regulator and the Bureau of Internal Revenue can resolve.

The dispute stemmed from a BIR ruling requiring Pagcor to pay the regular 30 percent corporate income tax from the money it makes from all of its casino operations and licensing of gambling casinos, gaming clubs and other similar recreation or amusement facilities. 

Aside from this, Pagcor will still be required to pay franchise tax.

This was after Pagcor’s removal from the list of government companies exempt from income tax.

 Tiger Resort Leisure and Entertainment Inc. president Masahiro Terrada said it is leaving the tax matter all up to Pagcor and is hoping for a fair and equitable resolution.

 â€œWe believe that Pagcor is already sorting this out. We’re out of this,” Terrada said.

Tiger Resorts was one of four groups that obtained a license to operate a casino in Entertainment City, the country’s response to gaming hubs in Macau and Singapore.

Entertain City gaming proponents are subject to license fees of 15 percent on gross gaming revenues from high roller tables and junked operations and 25 percent on gross gaming revenues from non-high roller tables, slot machines and electronic gaming machines as provided under the provisional license.

The provisional license provides that license fees are inclusive of franchise tax and that if the proponents are required to make any payment of franchise tax, Pagcor shall defend and also hold them harmless against such payment of liability.

BIR commissioner Kim Henares, however,said the agency remains firm on its position that all earnings of Pagcor are subject to 30 percent income tax. 

Henares said the Supreme Court had already ruled on the issue and Pagcor has no choice but to follow it.

“Taxation is not a matter of discretion that can be negotiated upon.  It is a matter of what the law states and implementing it,” she said.

The previous Pagcor management had contested before the High Court the constitutionality of the removal of the agency from the list of GOCCs exempt from paying income tax and asserted that the state gaming firm’s  charter exempted the agency from paying the corporate income tax.

However, the Supreme Court issued a decision on April 6, 2011 rendering as constitutional the removal of Pagcor from the list of corporate income tax-exempt entities.