In 2020, based on its annual report, PAGCOR recorded a total turnover of more than 36 billion pesos. Like many businesses that have ceased operations due to the COVID-19 pandemic, PAGCOR has not been spared the impact of the global health crisis. However, while the National Gambling Agency`s revenue from the gambling operation has plummeted significantly compared to 2019, PAGCOR has still been able to record significant revenues. Of the 36 billion pesos, PAGCOR paid taxes worth more than 1 billion pesos to the BIR. For licensees located in ecozones/freeports, their income from services or activities duly registered with their designated investment promotion agency (API) is subject to 5% gross income tax (GRI) or income tax exemption (ITH), as applicable. In order to collect correct and complete taxes, the BIR published on the 29th. March Revenue Memorandum Circular (RMC) No. 32-2022 with the aim of clarifying the tax treatment of PAGCOR and its licensees and contractors with respect to their income from gambling/casino operations and other related services. Income from gambling operations is subject to the 5% franchise tax. For VAT purposes, the sale of goods and/or services in the course of trade is in principle subject to VAT. However, if the Licensees are also engaged with PAGCOR in connection with its gaming operations, the sale of goods and/or services provided with PAGCOR in connection with such games of chance will be subject to 0% VAT. Similarly, other PAGCOR income not related to the above transactions is also subject to corporate tax, VAT and other applicable taxes in accordance with the Tax Code. (c) undertakings, bodies or instruments owned or controlled by the State.
Notwithstanding anything to the contrary in existing special or general laws, all government-owned or controlled companies, agencies or entities, other than the Government Services Insurance System (GSIS), the Social Security System (SSS), the Philippine Health Insurance Corporation (PIDC), the Philippine Bureau of Charitable Lotteries (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR), must: the rate of taxation on their taxable income determined by This section applies to companies or associations carrying on a similar enterprise, industry or activity. (emphasis and underline) In its opinion,48 the CIR replied, through the Office of the Solicitor General (OSG), that PAGCOR is no longer exempt from income tax because its exemption from income tax is granted by RA No. 9337.49 In this case, the assessments for deficit income tax include both PAGGOR`s income from gambling operations and other related services. In view of the fact that the Court of First Instance has already held that PAGCOR must continue to be exempt from income tax on its gaming activities under its statutes58, PAGCOR should only be required to pay income tax on its income from other related services for the 2005 and 2006 tax years. The parts of the contributions, in so far as they relate to the income from the operation of PAGGOR`s games of chance, must therefore be cancelled and cancelled. PAGCOR further submits that it is not responsible for FBT as a restraint officer.45 According to PACCOR, the CTA did not take into account the fact that the vehicle plan was extended to PAGGOR`s managers who were accustomed to it and that it is necessary or necessary for the performance of its activities.46 PAGCOR further submits that FBT, even assuming that: that he is subject to default, he is liable for property tax without surcharges or interest only if he is exempt from income tax and FBT in good faith and in all honesty.47 Income from related services/transactions that are not properly registered with the relevant IPA are subject to CIT taxes, VAT and other applicable taxes on a regular basis in accordance with the Tax Code. The recipient shall file the tax return with the Commissioner or his duly authorized representative in accordance with the provisions of section 128 of this Act and pay the tax due on it, and the tax return shall be submitted to the Bureau of Internal Revenue for review, notwithstanding anything to the contrary in the laws in force. PAGCOR sought clarification on the Court`s decision in the above-mentioned case following the issuance by the CIR of Memorandum Circular on Revenue (RMC) No. 33-2013, which stipulates, inter alia, that PACCOR`s income from the operation and licensing of casinos and gaming clubs and other related businesses is subject to both corporate income tax in under the NIRC 1997. in the version currently in force and the franchise fee in accordance with § 13 paragraph 2 letter a-Nr. These revenues include, but are not limited to: revenues from the operation of casinos; revenues from one-dollar mining; revenues from bingo activities, including any variation thereof; and income from mobile bingo operations operated by PAGCOR with agents on a commission basis, with the agent`s commission income subject to regular tax and, therefore, withholding tax.
51 § 119. – Notwithstanding any other provision of the general or special law, a tax of three percent (3%) and gas and water distribution companies shall be collected, assessed and levied on gas and water distribution companies for all broadcaster and/or television franchises whose gross annual income for the previous year does not exceed ten million pesos (10,000,000 pesos), subject to Article 236 of this Code. a tax of two percent (2%) on the gross income of the business covered by the Franchises Act: Provided that radio and television undertakings referred to in this Article have the possibility to register as taxable persons for VAT purposes and to pay the tax due on it: Provided, in addition, once the option is exercised, this option is irrevocable. (B) Transactions subject to zero percent (0%). The following services provided in the Philippines by VAT taxable persons are subject to the zero rate (0%). On 10 December 2009, the EIF submitted a response arguing, inter alia, that: (a) the JCPOA was subject to ordinary corporate tax; (b) that PAGCOR, as an ordinary taxpayer in accordance with the provisions of Republic No. 771623 or the Extended VAT Act is required to pay VAT on its income from casino transactions and related services; (c) that PAGCOR is responsible for FBT pursuant to Article 33 of the NIRC 1997 in respect of Tax Regulation (RR) No. 3-98; and (d) that JCPOA was properly assessed and informed of its default tax obligations for the 2005 and 2006 tax years.24 First. Under the Presidential Decree of 1869, as amended, [PAGCOR] is subject to income tax only in respect of the operation of related services. Accordingly, the exemption from income tax provided for in Article 27(c) of the R.A.
No 8424 clearly concerns only [PAGCOR`s] income from the operation of related services. Such an income tax exemption could not have applied to [PAGCOR`s] income from gaming establishments, since it was already covered by P.D. 1869, as amended, namely: (3) services supplied to persons or entities whose exemption effectively makes the supply of such services subject to a rate of zero per cent (0%) under special laws or international agreements to which the Philippines is a signatory; In addition, Article 13 § 2 of Presidential Decree no. 1869 provides that “no tax of any kind or form, income or otherwise, or royalties, levies or charges of any kind, whether national or local, shall be imposed and collected under this exemption by [PAGCOR]; no form of tax or duty shall be related in any way to [PAGCOR`s] revenues, except for a franchise fee equivalent to five (5%) of [PAGCOR`s] gross income or income derived from its activities under such franchise. This tax shall be due and payable quarterly to the national government and shall supersede all taxes, duties, charges or charges of any kind, type or description collected, established or collected by any municipal, provincial or national governmental authority. However, for VAT purposes, the exemption extends only to natural or legal persons who have concluded a contract with PAGCOR; therefore, the contractors of the JCPOA and not the licensees. Consequently, licensees` income from games of chance involving the sale of goods and/or services in the course of an industrial or commercial activity is, in principle, subject to VAT.