State-run Philippine Amusement and Gaming Corp (Pagcor) might revoke the 2014 decision that lowered the licence fees for casino operators at Entertainment City in Manila. That would mean that tax rates would increase by 10 percent, to respectively 15 percent and 25 percent of gross gaming revenues (GGR).
The new head of Pagcor, Andrea Domingo, told the Manila Bulletin newspaper that the regulator would be reinstating the original rates “as soon as we can”.
“Since that decision was decided by the previous board [of Pagcor], my decision has to be ratified by the present board,” Ms Domingo told the newspaper.
In May 2014, Pagcor – then chaired by Cristino Naguiat – announced a framework to temporarily offset the adverse impact of a mandated shift in the tax regime on the country’s gaming industry.
Pagcor’s decision aimed to address the additional exposure to corporate income tax brought about by the Bureau of Internal Revenue (BIR). In 2013, the BIR imposed corporate income tax at a rate of 30 percent on the private sector casino operators licensed by Pagcor.
Following the tax bureau’s decision, Pagcor announced a 10 percent adjustment in licence fees on developments at Entertainment City.
Casinos at Entertainment City include the Solaire Resort and Casino, operated by Bloomberry Resorts Corp; and City of Dreams Manila (pictured), of Melco Crown (Philippines) Resorts Corp. Still under construction are Okada Manila of Tiger Resort Leisure and Entertainment Inc, due to open in November; and a property by Travellers International Hotel Group Inc, expected to be completed by the fourth quarter of 2020.
Before the 2014 decision, the casino regulator was imposing a 15 percent share from casinos’ GGR from high roller tables and junket operations; and 25 percent on gross revenue from mass-market tables, slot machines and electronic gaming machines.
At the time, Pagcor and the casino operators said they had agreed to revert to the original licence fee structure “in the event the BIR action to collect income tax from Pagcor licensees is permanently restrained, corrected or withdrawn”.
In her comments to the Manila Bulletin, Ms Domingo said the country’s Commission on Audit had warned Pagcor because of the special rates that it is currently granting to some private sector casino operators.
“What’s on the contract should be followed and what the auditor is saying should be followed,” Ms Domingo said in a separate radio interview on Thursday.
Bloomberry in June 2014 filed a petition with the Philippines’ Supreme Court seeking to cancel the provision from the tax bureau. The company – in its half-year earnings report filed on Thursday – said it was still awaiting the resolution from the Supreme Court as of June 30, 2016.
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"If the [Macau casino] concessions are put up for bid, there will also be a lot of giant Chinese companies, some having nothing to do with gaming, which would like to take over these enormously successful casinos”
Professor emeritus at Whittier Law School in California, in the United States, and a visiting professor at University of Macau