|
REVENUE
officials believe the Philippine Amusement and Gaming
Corp. (Pagcor) has loosely interpreted the various tax
laws to its advantage and want the loopholes closed.
The
National Tax Research Center (NTRC) found that Pagcor
has withheld—through the liberal interpretation of what
amounts to “gross earnings”—billions of pesos worth of
earnings that should have been remitted to the
government.
Gross
earnings or gross revenues determine how much Pagcor
must set aside each year as franchise tax and as share
of the government in its gaming operations, set in this
case at 5 percent and 50 percent, respectively.
Pagcor’s
charter provides for a 5-percent franchise tax based on
“gross revenues derived from its operations” and
additionally, must remit half its “aggregate gross
earnings” from the franchise to the national government,
as well.
Owing to
lack of clear guidelines, however, Pagcor historically
computed both tax and government share only on winnings
from table games and from slot machine revenues
generated by its 13 casino branches.
The NTRC
said Pagcor partakes of the winnings of its many casino
licensees and these do not form part of its gross
revenue base.
Also,
slot-machine revenues from so-called demo units, or
those that Pagcor technically do not own as yet, also do
not form part of the gross revenue base and revenues
there are lumped instead as “other income.”
The
profitability of demo units may be gleaned from the fact
that Pagcor generated P1.58 billion from them in 2006,
comprising 58 percent of its “other income” account that
year alone.
“The use
of winnings from table games and slot machines as basis
for the franchise tax and government share may be
appropriate during the early years [when] Pagcor income
was basically from gaming tables inside the casinos. But
since then Pagcor operations have evolved,” the NTRC
stressed.
NTRC
chief Lina Isorena said Pagcor is now into bingo games,
Internet gaming, chipwashing operations and even into
the licensing of privately owned casinos, all of which
produce substantial revenues.
“There
is, therefore, urgent need to evaluate and define the
sources of income on which the franchise tax and the
50-percent government share are based,” she said.
Pagcor
generated total income in excess of P24 billion in 2006
but it computed the franchise tax and the government
share on the basis of revenues totaling only P19.4
billion, according to Isorena. Pagcor has argued the
balance was derived from its “nongaming” operations that
include bingo, chipwashing, Internet gaming and
licensing.
Presidential Decree 1869 issued in July 11, 1983,
mandated Pagcor to pay a 5-percent franchise tax in
place of all other taxes and must also remit half its
gross earnings to the national government.
It also
pays income tax derived from related services
operations, shows and entertainment and has also paid
the regular corporate income tax since May 2005 when its
exemption was lifted.
Pagcor’s
gross receipts have also been levied the 12-percent
value- added tax. |
