Philippines: PAGCOR ordered to pay up on deficiency income tax

The Court of Tax Appeals has ordered PAGCOR to pay PHP117m.

The Philippines.- The Court of Tax Appeals (CTA) has ordered PAGCOR to remit deficiency income tax of PHP117m (US$2.1m) for the years 2005 and 2006. The ruling, delivered on December 22 by associate justice Lanee S. Cui-David, stipulates that PAGCOR must also settle delinquency interest based on a 2017 Supreme Court decision that referred the case back to the CTA for the final determination of the payable amount.

The CTA set a basic deficiency income tax payment of PHP13.11m (US$235,500) for 2005 and PHP104.9m (US$1.88m) for 2006. The legal issue originated in 2008, when the Bureau of Internal Revenue (BIR) issued assessments totalling PHP5.92 bn (US$106.35m), covering deficiency income tax, value-added tax, and fringe benefit tax (FBT) for 2005 and 2006.

The 2017 Supreme Court ruling partially favoured PAGCOR, annulling the BIR’s assessment regarding deficiency income tax related to gaming operations. The court clarified that while Republic Act 9337 (Value Added Tax Reform Law) did not revoke PAGCOR’s tax privileges under Presidential Decree 1869 (PAGCOR Franchise Law of 1983), it withdrew the exemption from corporate income tax on revenue from related services. The court asserted that FBT is not covered by these exemptions. 

See also: PAGCOR posts total income of US$906m for first nine months of 2023