The Philippines’ gaming regulator has reached an agreement with the country’s Entertainment City licensees that effectively slashes the tax on gaming revenue to offset a pending tax on corporate income.
The reductions will come in the form of new license fees, which are to be paid in lieu of the tax on GGR, according to prior agreements between the four licensees and PAGCOR, the government-run Philippines Amusement and Gaming Corporation.
The new fees will be 15% of mass gaming, down from 25%, and 5% of VIP, down from 15%.
The reductions, said PAGCOR, are intended to “make whole” the gaming operators after a Supreme Court order last year removed the regulator/operator’s tax exempt status in conjunction with a ruling from the Bureau of Internal Revenue that PAGCOR is subject to the country’s 30% corporate income tax. By default, the tax also applies to the country’s private operators.
The new agreement covers four companies:
· Travellers International Hotel Group, a PSX-listed joint venture between the Philippines’ Alliance Global and Genting Hong Kong. Travellers also operates Resorts World Manila, the country’s largest casino;
· PSX-listed Bloomberry Resorts, owner of Solaire Resort & Casino, which opened at Entertainment City last March;
· PSX-listed Melco Crown Philippines, which is slated to open its City of Dreams Manila at Entertainment City later this year in partnership with Belle Corp., a subsidiary of the Philippines’ SM Group;
· Universal Entertainment’s Tiger Resorts Leisure and Entertainment, which plans to open its Manila Bay Resorts at Entertainment City in 2015.
The operators all hailed the reductions while noting that they are temporary pending a final disposition of the BIR ruling, which PAGCOR is challenging.
“The adjustment … is not intended to modify, amend or revise the Provisional License/s,” said Melco Crown in a statement. “The parties agreed to revert to the original license fee structure under the Provisional Licenses in the event the BIR action is permanently restrained, corrected or withdrawn.”
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