Press Release
August 6, 2008

GOV'T LOSES 3.9 BILLION ANNUALLY FROM PAGCOR REMITTANCE

The government is losing 3.9 billion pesos yearly due to discrepancies in the computation of the Philippine Amusement and Gaming Corporation's tax liability to the government.

This was revealed by the Bureau of Internal Revenue in today's hearing of the Senate Ways and Means Committee of Senate Resolution No. 287 which Senator Chiz Escudero filed directing the Senate Committee on Ways and Means to look into the taxes which PAGCOR, its licensees, partners, agents and assigns should be remitting to the government.

Escudero said PAGCOR has failed and neglected to submit its income statement to the Department of Finance (DOF), the Department of Budget and Management (DBM) and to Congress as categorically admitted by the DOF and the DBM themselves in the past hearings of the committee.

Records show that PAGCOR is only remitting 5 percent franchise tax on gross income. The BIR however posits that PAGCOR should be remitting 12% value added tax and 35% income tax in lieu of what the gaming agency is currently remitting. PAGCOR has filed a case with the Supreme Court contesting the said BIR position.

Escudero, who chairs the Senate Committee on Ways and Means said PAGCOR failed to submit its record of income derived from operations and activities, thus making it impossible to ascertain if indeed proper and correct taxes are being paid and remitted to the government.

The senator said Presidential Decree No. 1869, as amended, also known as the PAGCOR Charter, provides for a five percent (5%) Franchise Tax on the gross revenue or earnings derived by PAGCOR, its agents, assigns and/or casino operators from their businesses.

Under the said law, dividend income from casino and gambling operations shall be subject to a final income tax rate of ten percent (10%) in lieu of the regular income tax rates. Total exemption from income or other forms of taxes can only be derived under certain strict condition of investments.

"PAGCOR is contracting away revenue that is due the government. The government should have a singular stand on tax issues and it should not allow its own agencies to sue each other before abiding to a clear mandate, in this case to the taxes that PAGCOR is liable to pay to the national government. If this is not corrected, the government is forfeiting its right to collect due revenues at a time when additional revenues are needed by the government to cushion the current economic woes in the country."

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