GGRAsia – Casino entry fee for Filipinos backed by tax think tank

Casino entry fee for Filipinos backed by tax think tank

Dec 28, 2015 Newsdesk Latest News, Philippines, Top of the deck

An official Philippines think tank has backed a proposed law that would impose a PHP3,500 (US$74) entry fee on all Filipinos – resident in the country – that use the country’s casinos.

The National Tax Research Center (NTRC) says such a fee would amount to an economic test on locals wishing to use casinos, and would embody the spirit of existing unenforced legislation.

“Under Section 14(3)(b) of Presidential Decree 1869, Filipino residents with gross income of at least PHP50,000 in the previous year, as certified by the Bureau of Internal Revenue, are allowed to play in casinos. However, the said provision is neither observed nor imposed. Thus, the [new] bill aims to discourage Filipinos from playing in casinos,” the center noted.

“The proposal to charge an entrance fee in Philippine casinos amounting to PHP3,500 is supported since it would only be collected from those who have the financial capacity to splurge some money in the casinos,” the NTRC added, giving its backing to the idea.

The think tank said the measure is contained in House Bill 4859 titled ‘An Act Imposing the Payment of Entrance Fee to Residents of the Philippines that Patronize Casino’, introduced by Representative Peter Unabia and to be considered by the country’s Congress.

Singapore imposes on Singapore citizens and permanent residents a statutory entry levy at its two casino resorts of either SGD100 (US$71) for 24-hour access, or SGD2,000 for a year’s entry. Japan has also discussed the possibility of some kind of entry levy on any casino resorts it might eventually allow.

Unequal treatment

The Philippines’ NTRC noted that in the domestic gaming and betting market there was an “unequal tax treatment of casinos, lotteries and horse racing activities wherein horse racing clubs and bettors are saddled with more taxes.”

The paper, called ‘Profile and Taxation of Selected Gambling and Betting Activities in the Philippines’, outlined the existing tax regime for casinos. It said there were a corporate income tax, a franchise tax and a final withholding tax on prizes of more than PHP10,000.

In December 2014 the Philippines’ Supreme Court ordered the Bureau of Internal Revenue to stop collecting corporate income tax on the gaming operations of the country’s casino gaming regulator-cum-operator, the Philippine Amusement and Gaming Corp (Pagcor).

In April 2013, the Bureau of Internal Revenue had issued a memorandum circular saying Pagcor and its licensed casino operators were subject to the 30-percent corporate income tax, instead of a 5-percent franchise tax on gross gaming revenue, removing an exemption given to four operators developing casinos at Entertainment City in Manila.

According to media accounts in February this year – when the Supreme Court’s ruling on the Bureau of Internal Revenue memo was first reported – the judicial decision made no mention of the corporate tax liability of Pagcor’s private sector casino licensees.

But in a compromise designed to offset the effects of the bureau’s 2013 decision on the casino industry’s corporate tax liability, Pagcor in May 2014 introduced a 10 percent decrease in licence fees on developments at Entertainment City, a zone of new private sector casino resorts recently built or still being constructed on reclaimed land in the Metro Manila area of the Philippines capital.

Nonetheless in June last year Bloomberry Resorts and Hotels Inc, the subsidiary of Bloomberry Resorts Corp operating the casino in Manila’s Solaire Resort and Casino, filed a court case arguing that the Bureau of Internal Revenue’s original April 2013 memo on corporate income tax liability for the country’s casinos ran contrary to a presidential decree of 1983.

Other topics discussed by the tax think tank’s paper include proposed legislation that would impose a 20 percent tax on licensed lotto game winnings in the Philippines.

The NTRC said it also supported the move “for equity reasons, considering that other forms of winnings are subject to the tax”.