An investigation from the state-run Commission On Audit (COA) has reportedly found that the Philippine Amusement And Gaming Corporation owes the government just over $327 million as a result of an under-remittance of tax from 2011 to 2015.
After deducting a 5% franchise tax, the state-owned casino operator is required to hand over half of its annual gross earnings to the central government with the COA inquiry discovering that it should have paid approximately $2.08 billion during the five-year period. But, the examination allegedly found that the Manila-based entity forwarded only about $1.53 billion, which resulted in a shortfall of around $548.85 million.
The COA stated that the underpayment was purportedly due to the Philippine Amusement And Gaming Corporation interpreting “gross earnings” as those coming solely from casino gaming rather than gains made from all of its activities. It additionally explained that the operator had overpaid during the period in question by about $222.97 million to leave an overall deficit amounting to some $327.1 million.
“The Office Of The General Counsel, Legal Services Sector of this Commission, clarified in its memorandum dated June 29, 2015, that jurisprudence dictates that when we speak of the “gross earnings”, we mean the entire earnings or receipts of such person or corporation from the business or operation to which we refer,” read a statement from the COA.
The COA declared that Section 12 of Presidential Decree 1869 requires that the government receive 50% of the Philippine Amusement And Gaming Corporation’s “aggregate gross earnings”, which are subsequently used to fund infrastructure and socio-economic projects in the Manila area.
“Since the law does not distinguish as to what constitutes aggregate gross earnings, the Philippine Amusement And Gaming Corporation lacks the authority to make any distinctions and must construe the words in its general sense consistent with the principle “Ubilex non-distinguish necnos distinguire debemos” or “where the law does not distinguish, neither do we distinguish’,” read the COA statement. “Therefore, the aggregate gross earnings of the Philippine Amusement And Gaming Corporation from which the 50% government share shall be computed should not only mean income from gaming revenues but should include income from other related services as well.”
Despite protests from the Philippine Amusement And Gaming Corporation, which operates over 30 casinos in the Philippines including the Casino Filipino Tagaytay, the COA is standing firm and further recommended that the operator honor its arrears immediately and thereafter compute “gross earnings” on its entire income rather than to takings tied solely to its casino gaming activities.
“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,” read the COA statement.