THE Supreme Court (SC) has sided with gambling firm Bloomberry Resorts Corp., which operates Solaire Resorts and Casino, and said its income from gaming operations is not taxable.
In its en-banc decision penned by Associate Justice Jose Portugal Perez dated August 10 but only released on Tuesday, the High Court sided with the gambling firm controlled by billionaire Enrique Razon Jr., also the chairman of Bloomberry, and said its corporate income from gaming operations is not subject to tax.
It was subject only to a 5-percent franchise tax on gross-gaming revenues.
In 2014 Bloomberry sued the Bureau of Internal Revenue (BIR), then headed by Kim Henares, and sought to annul the agency’s Revenue Memorandum Circular 33-2013, which subjected contractees and licensees of the Philippine Amusement and Gaming Corp. (Pagcor) to income tax. The case was docketed as GR 212530. The High Court ordered the BIR to cease and desist from implementing the memorandum order “insofar as it imposes corporate-income tax on petitioner Bloomberry Resorts and Hotels Inc.’s income derived from its gaming operations.”
The BIR’s memorandum cuts Bloomberry’s and other locators of Pagcor’s Entertainment City’s license fees by as much as 10 percentage points. The license fees for slot machines will be decreased to 15 percent, from the original 25 percent of gross gaming revenues, while junket will be reduced from 15 percent to 5 percent. The BIR ruling, however, stated Pagcor’s income from its operations and licensing of gambling casinos, gaming clubs and other similar recreation or amusement places, gaming pools and other related operations, are subject to corporate-income tax.
Pagcor is also subject to a franchise tax of 5 percent of the gross revenue or earnings it derives from its operations and licensing of gaming casinos, gaming clubs and other related operations.
Under existing rules, Pagcor holds a monopoly over casinos in the country. The court extended this privilege to the four locators of the Entertainment City in Parañaque. The other three are Andrew Tan’s Travellers International Hotel Group Inc., which will operate its Westside City casinos; a joint venture of Melco Crown (Philippines) Resorts Corp. and SM Group’s City of Dreams Manila; and Tiger Resorts Leisure and Entertainment Inc. to be called Okada Manila.
Pagcor allowed the four groups to undertake gaming activities in the Manila Bay reclamation complex in Parañaque City and Newport in Pasay City on the condition that each one invest at least $1 billion in integrated resorts, where over 90 percent of the total builtup area would be devoted to nongaming investments in hotels, shopping, dining and entertainment.