GGRAsia – Pagcor underpaid central govt: Commission on Audit

Pagcor underpaid central govt: Commission on Audit

Jul 11, 2016 Newsdesk Latest News, Philippines, Top of the deck

The Philippine Amusement and Gaming Corp (Pagcor) underpaid by PHP15.40-billion (US$327.1-million) – over a five-year period – the central government’s 50 percent share of the earnings generated by the casino industry regulator, according to a report from the country’s Commission on Audit.

The Commission said the underpayment was because Pagcor had interpreted “earnings” as referring to casino-related earnings, rather than to earnings from all activities of Pagcor. It added it had clarified this point in a memorandum on June 29 last year.

In a reply to the audit report, Pagcor said that Section 12 of Presidential Decree 1869 “provides that the 50 percent national government share shall be computed based on the aggregate gross earnings of Pagcor from the franchise, which refers to Pagcor’s gaming operations”.

Pagcor’s management added: “Since Pagcor’s franchise refers to the operation of casinos and other gaming activities, it legally and logically follows that the 50 percent national government share should be based on Pagcor’s income from gaming operations authorised by its franchise.”

But the Commission retorted: “… we stand firm with our stance that aggregate gross earnings pertained to the totality of the income from gaming revenues and income from other related services.”

The document said Presidential Decree 1869 provides that after deducting a 5-percent franchise tax, the government must have a 50 percent share of Pagcor’s “aggregate gross earnings” in order to fund the government’s infrastructure and socio-economic projects within the Metro Manila area of the country’s capital.

“We recommended that [Pagcor's] management cause the remittance of the total amount of PHP15.401 billion to the Bureau of Treasury … Thereafter, computation of the 50 percent government share should be based on the entire income of Pagcor, not only income from gaming revenues,” said the Commission.

The country’s new president, Rodrigo Duterte, recently named Andrea Domingo, a former head of the Philippines’ Bureau of Immigration, as the new head of Pagcor.