BIR opposes PAGCOR proposal to change franchise tax distribution

PAGCOR proposes giving more funds to local governments.
PAGCOR proposes giving more funds to local governments.

PAGCOR has proposed that 3 per cent of the franchise tax go to the national government and 2 per cent to local government units.

The Philippines.- Bureau of Internal Revenue (BIR) representative Ralbert Tibayan spoke against the Philippine Amusement and Gaming Corp.’s (PAGCOR) proposal to redistribute the 5 per cent franchise tax it pays from its operation and licensing of casinos. He spoke at a hearing by the House of Representatives Committee on Games and Amusements.

PAGCOR has suggested redistributing the tax to give 3 per cent to the national government through the BIR and 2 per cent to local government units (LGUs) hosting PAGCOR casinos. Currently, the entire 5 per cent franchise tax goes to the BIR while host cities receive less than one per cent of revenue.

Last year, the BIR received PHP2.75bn from the franchise tax while host cities only received PHP451.72m, equivalent to 0.76 per cent of revenue. If the franchise tax is reallocated, host LGUs will receive PHP1.1bn, and the BIR’s revenue will decrease to PHP1.65bn based on the projected 2022 franchise tax of 5 per cent.

PAGCOR president and COO Juanito Sanosa said: “We will respect whatever the body will pass but we just want to present that many of those presently distributed by PAGCOR will be hit.”

PAGCOR posts income of US$1.08bn for 2022

The regulator and operator reported income of PHP58.96bn (US$1.08bn) for the year 2022. The figure was up 66.2 per cent when compared to the previous year. It reported PHP55.05bn (US$1bn) in income from gaming operations, up 68.7 per cent yearly. Meanwhile, its expenses increased by 61.4 per cent year-on-year to PHP22.59bn. PAGCOR had to withdraw nearly PHP31.65bn in subsidies, financial aid and other contributions to the government.

Net revenue was nearly PHP4.45bn in 2022, compared to PHP203.57m in 2021. The 2021 results were affected by multiple countermeasures associated with the Covid-19 pandemic. However, 2022 performance was still only half of the PHP9.01bn reported in 2019 before the pandemic.

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