State-owned operator and regulator Philippine Amusement and Gaming Corporation (Pagcor) has agreed to reduce license fees for the four casino operators in Entertainment City as it looks to counter tax concerns.
Pagcor and the four casino licensees said they signed an agreement reducing license fees, as a percentage of gross gaming revenues, by 10 per cent starting beginning 1, 2014.
All those involved said that the agreement was ‘a mutually beneficial and practical solution to address the additional exposure to corporate income tax brought about revenue circular issued by the Bureau of Internal Revenue (BIR).’
“Such a solution not only preserves for the Philippine government the financial benefits that it already derives from the provisional licenses but also validates Pagcor’s commitment to uphold and abide by the terms of the provisional licenses,” they stated.
The four operators include Travellers International Hotel Group owned by Andrew Tan, Bloomberry Resorts and Hotels owned by Enrique Razon, Melco Crown Entertainment of the SM group, and Tiger Resorts Leisure owned by Kazuo Okada.
“The parties agreed to revert to the original license fee structure under the provisional licenses in the event the BIR action is permanently restrained, corrected or withdrawn,” the operators stated. “Pagcor and the licensees also agreed that the 10 per cent license fee adjustment is not an admission of the validity of BIR RMC No. 33-2013 and it is not a waiver of any of their remedies against any assessment/s by the BIR for income tax on their gaming revenue.”
Pagcor licensees will also now pay the 30 per cent corporate income tax on net taxable income instead of the five per cent franchise tax on gross gaming revenue.
Clarence Chung, Chairman and President of Melco Crown Philippines, said: “We welcome this initiative and express our sincerest gratitude to the government of the Republic of the Philippines and Pagcor for their continuous support in helping us realise our gaming, leisure and entertainment complex in Manila. The development of City of Dreams Manila is progressing well and we firmly believe our integrated leisure and entertainment destination resort will play a key role in furthering the ambitions of the Philippines in establishing the country as a major leisure and tourism destination in the region.”