Pagcor, BIR end tax dispute with P857M settlement

Philippine Amusement and Gaming Corp. (Pagcor) has settled almost a billion pesos in back taxes seven years after the agency was taken off the list of tax-exempt government agencies.

In a statement, Pagcor chairman and CEO Cristino Naguiat Jr. said the company had paid the Bureau of Internal Revenue (BIR) P857 million worth of tax arrears as of December 2011.

Naguiat said the back taxes were largely accumulated by the agency under its previous administration.

These tax liabilities were incurred between 2004 and 2010 when Pagcor was removed from the list of agencies that were exempted from paying corporate income tax.

Pagcor contested the constitutionality of the ruling, asserting that under its charter, it was exempted from these liabilities. However, the Supreme Court upheld last year the removal of the agency from the list of corporate income tax-exempt entities.

“We talked to Revenue Commissioner Kim Henares and informed her of our desire to voluntarily comply with Pagcor’s tax obligations by offering to settle P857 million in back taxes,” Naguiat said. “This is our way of helping raise more funds for our government.”

He said that, after the Supreme Court’s ruling, Pagcor immediately coordinated with the BIR for an audit of the back taxes owed by the agency.

To facilitate its tax settlement, Pagcor took the initiative of doing an initial computation of its tax obligations and submitted this to the BIR last December.

The BIR eventually agreed to accept P857 million as partial settlement of the agency’s tax liabilities.

“The amount is still subject to validation by BIR,” Naguiat said. “There is still an ongoing audit investigation. We will not hesitate to pay the taxes due our government.”

Pagcor is the third-largest revenue-generating arm of the government, after the BIR and Bureau of Customs.

From January to November 2011, Pagcor generated a gross revenue of P33.2 billion, P15.5 billion of which was channeled to Pagcor’s socio-civic programs; and P1.1 billion went to the BIR in the form of franchise taxes, P10.7 billion to the National Treasury, P536 million to the Philippine Sports Commission, P453 million to host cities, P1.6 billion to the President’s Social Fund, P873 million as direct assistance for socio-civic projects, P40 million to the Board of Claims and P14.37 million for special laws.