Pagcor urges review of reforms that slash its tax breaks

The Philippine Amusement and Gaming Corp (Pagcor) has urged lawmakers to reflect on proposed reforms to corporate tax laws that may reduce the organisation’s profitability. The Philippine congress is considering tax reform legislation that includes a reduction of the rate of corporate income to 25 percent, down from 30 percent. The bill before lawmakers makes up the shortfall in government revenue by rationalising other tax incentives. Those incentives include the repeal of a presidential decree that Pagcor pay a tax of 5 percent on the gross revenue from its operations and be exempt from all other taxes. Pagcor is the country’s gaming regulator and an operator of casinos.

In a press release issued on Thursday, Pagcor said its tax break should stay in place because it faces “already onerous obligations” to contribute to the nation’s coffers, among other commitments. Pagcor noted that it also contributes to “nation-building and other socio-civic undertakings”. “Pagcor at any year could be contributing to government coffers from 52.5 percent to almost 70 percent of its earnings. Thus, illustrating why the ‘in lieu of all taxes’ provision was included in Presidential Decree 1869 and why it should stay,” the statement reads. “We hope that the bills… will be meticulously studied,” it adds.

Presidential Decree 1869 took effect in 1983 and regulates gaming and casinos in the Philippines. The decree also specifies the tax regime for Pagcor. Under the Comprehensive Tax Reform Package proposed by President Rodrigo Duterte, the Philippine government has passed legislation to spread the tax burden across the economy.

In Thursday’s release, Pagcor stated: “If the ‘in lieu of al taxes’ provision is repealed, it should also include the repeal of all the funding requirements of Pagcor, leaving only the corporate income tax, such that Pagcor and its licensees should be treated as ordinary businesses.” Pagcor has made headlines recently for exceeding official guidelines for loyalty payments and gifts to long-serving staff. Its management was forced to deny the report by a government auditor that it had spent lavishly on 18-carat gold rings for 20-year veterans at the organisation. Pagcor says the practice of giving staff gold rings ended in 2016.

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