The state-run Philippine Amusement and Gaming Corp. has struck a deal with gaming operators to cut license fees by 10-percent of gross gaming revenues to neutralize the burden arising from a controversial judicial ruling that changes the local gaming tax regime.
The reduction in the license fee as a percentage of gross gaming revenues from both high-roller VIP (very important person) and mass markets was intended to appease gaming operators after a Supreme Court order removed Pagcor’s tax-exempt status. As a consequence, the tax regime changed for all private licensees as well. Instead of paying the 5-percent franchise tax on gross gaming revenues, they will be subjected to the 30-percent regular corporate income tax.
To address the game-changing impact of its loss of tax exemption, Pagcor entered into an agreement with its Entertainment City licensees, namely tycoon Andrew Tan-led Travellers International Hotel Group Inc., Enrique Razon Jr.-led Bloomberry Resorts and Hotels Inc., Macau’s Melco Crown-led MCE Leisure (Philippines) Corp. and Okada-led Tiger Resorts Leisure and Entertainment Inc. on the 10-percent reduction in license fees.
With this, Pagcor agreed to slash the license fee on the VIP segment from 15 percent to 5 percent of gross gaming revenues and on the mass segment, from 27 percent to 17 percent of mass gaming revenues.
“In the spirit of continuity and predictable governance, Pagcor will uphold and abide by the license terms agreed during the previous administration,” Pagcor said in a statement, noting that this formula was supported by an opinion from the Office of the Government Corporate Counsel. For non-gaming revenues such as those from hotels, the licensees are expected to pay corporate income tax, Pagcor said.