MANILA, Philippines – Bloomberry Resorts and Hotels Inc. (BRHI) will revert to its original license fee structure after the Supreme Court issued a ruling preventing the Bureau of Internal Revenue from imposing corporate income tax on earnings from gaming operations.
“This Supreme Court decision will allow Pagcor and BRHI as an integrated casino resort to revert to the original license fee structure of 15 percent and 25 percent license fee (inclusive of the five percent franchise tax) for high rollers/junket and mass gaming respectively,” Bloomberry said in a disclosure to the Philippine Stock Exchange.
This was from a special rate of five percent to 15 percent, respectively which was a result of a compromise agreement forged between Pagcor and the licensees of the Entertainment City to cushion the impact of the BIR circular on the imposition of a 30 percent corporate tax on income from gaming operations.
The company, which operates Solaire Resort & Casino filed in 2014 a petition to nullify BIR’s Revenue Memorandum Circular No. 33-1013 issued by then BIR Commissioner Kim Henares in 2013 which imposed corporate income tax on casinos.
The High Court granted the certiorari petition of BRHI against the BIR.
The Commission on Audit (COA) earlier warned Pagcor about the imposition of special rates for some casinos that resulted in P7 billion in foregone revenues.
RMC 33-2013 revoked the income tax exemption of Pagcor as part of efforts to boost state coffers.
As a result Pagcor licensees have been subjected to the 30 percent corporate income tax on their net taxable income instead of the five percent franchise tax on their gross gaming revenues.
Pagcor under the Aquino administration then agreed to a reduction in license fees but the parties agreed to revert to the original license fee structure in the event the BIR action is permanently restrained, corrected or withdrawn.