agcor Chairperson Andrea D. Domingo said the Commission on Audit (COA) has already warned the gaming regulator about the imposition of special rates for some casinos, which cost the government about R7 billion in foregone income.
“As soon as we can,” Domingo told the Manila Bulletin in a text message when asked how soon they could reinstate the original rates. “We are now preparing the necessary correspondence.”
But Domingo also said the cancellation of the lowered fees will require ratification by the new Pagcor board.
“Since that decision was decided by the previous board, my decision has to be ratified by the present board,” the Pagcor chief said.
In May 2014, Pagcor temporarily lowered the license fees to be paid by gambling casinos at Entertainment City in Pasay after the Bureau of Internal Revenue (BIR) slapped a 30-percent income tax on gaming companies.
Before the reduction, Pagcor was imposing a 15 percent share from casinos’ gross gaming revenues from high roller tables and junket operations and 25 percent on gross gaming income from non-high roller tables, slot machines and electronic gaming machines
But the previous Pagcor board decided to reduce its fees to five percent for high roller tables and junket operations, and to 15 percent for non-high roller tables, slot machines and electronic gaming machines.
Fees reduction benefited gaming firms Travellers International Hotel Group, Inc., Bloomberry Resorts and Hotels, Inc., MCE Leisure (Philippines) Corp., and Tiger Resorts Leisure and Entertainment, Inc.
In their joint statement disclosed to the Philippine Stock Exchange in May 2014, the gaming firms explained the reduction was justified as it was “a mutually beneficial and practical solution to address the additional exposure to corporate income tax” imposed by the BIR.
In April 2013, the BIR issued a memorandum circular tasking licensed casino operators to pay a 30-percent corporate income tax instead of the five-percent franchise tax on gross gaming revenues.
But Domingo now said that gambling casino operators have to honor their contract with Pagcor and pay the appropriate license fees as agreed between the regulator and the private entities.
She also added that Pagcor, as a state owned and controlled company, is mandated by law to follow the order by government auditors.
“What’s on the contract should be followed and what the auditor is saying should be followed,” Domingo said in a radio interview on August 10.