The Supreme Court of the Philippines has upheld its decision that declared Bloomberry Resorts and Hotels, Inc.’s (Bloomberry)(BLOOM.PS) exemption from paying a corporate tax, imposed by the Bureau of Internal Revenue (BIR), as a franchisee of the Philippine Amusement and Gaming Corporation (PAGCOR).
The High Court has enjoined the BIR from implementing a memorandum circular imposing corporate income taxes on the government-owned and controlled PAGCOR’s earnings and the earnings of its franchisees, reports The Manila Times.
The Supreme Court held that the Pagcor Charter or Presidential Decree (PD) No. 1869, clearly states that PAGCOR is only liable to pay the five percent franchise tax on its gross revenues “in lieu of all taxes of any kind or form, as well as fees, charges or levies of whatever nature, which necessarily include corporate income tax,” according to the report. Adding that, “There was no need for Congress to grant tax exemption to [Pagcor] with respect to its income from gaming operations as the same is already exempted from all taxes of any kind or form, income or otherwise, whether national or local, under its Charter, save only for the five percent franchise tax.”
The High Court said the exemption extended to licensees of PAGCOR, such as the billionaire Enrique Razon-led Bloomberry and Sureste Properties, Inc., its parent company.
The Supreme Court said, “Bloomberry and its parent company, Sureste Properties, Inc., own and operate Solaire Resort & Casirto. Thus, being one of its licensees, petitioner only pays Pagcor license fees, in lieu of all taxes, as contained in its provisional license and consistent with the PAGCOR Charter or Presidential Decree (PD) No. 1869, which provides the exemption from taxes of persons or entities contracting with PAGCOR in casino operations,” according to the news agency.
The tax dispute case has to do with a 30 percent corporate income tax the BIR imposed on private sector casino operators licensed by PAGCOR in April 2013 (revenue memorandum circular (RMC) No. 33-2013). The Philippine-based Bloomberry, which owns and operates Solaire Resort & Casino in Manila’s Entertainment City, filed a petition with the country’s Supreme Court in June 2014 seeking to cancel the provision from the BIR. In its petition, Bloomberry noted that, in issuing the circular, the tax bureau exceeded its reach by ruling contrary to a law’s intent.
Section 27(C) of the NIRC was amended by Republic Act (RA) 9337 pursuant to the issuance of RMC No. 33-2013, effectively removing PAGCOR from the enumeration of government-owned and controlled corporations exempt from paying corporate income tax. Prior to RA 9337’s passage, PAGCOR and its licensees were liable only for a five percent franchise tax on its gross revenue pursuant to its charter of PD No. 1869.