The Supreme Court came out with a ruling that the profit of Philippine Gaming Corp. (PAGCOR), which was generated from the company’s gaming operations, can not be subjected to corporate income taxes. The Court ruled that the above-mentioned company’s income can be subject only to a franchise tax, which amounts to 5%.
In its ruling, the Supreme Court stated that the Revenue Memorandum Circular 33-2013 must be no longer implemented by the Bureau of Internal Revenue to the company’s income gathered from PAGCOR’s operations and gambling casinos licences. The same applies to the profit coming from other related services.
As reported by reputable local media, the Supreme Court said in its ruling: “We agree with the petitioner (PAGCOR) that if the lawmakers had intended to withdraw petitioner’s tax exemption of its gaming income, then… (it) should have been mentioned in the repealing clause of RA 9337.”
So, this is how the Bureau’s efforts concentrated on collecting corporate income taxes from the Philippine-based operator failed after a long-lasting court battle.
The 14-page ruling put an end to the saga, which started after the RMC 33-2013 was issued by the Bureau of Internal Revenue as a result from another ruling of Court. The latter stated that the Constitution is not violated by Republic Act 9337. A modification of the National Internal Revenue Code was made by the latter, which excluded PAGCOR from the list of companies exempt from paying corporate income tax.
Neither RA 9337, nor the non-impairment clause was ruled by the High Court to be violating the equal protection. The Court also explained that the privilege of the company to own and operate gambling casinos and other facilities resulted from the legislative franchise, which has always been subjected to changes, modifications or cancellations by Congress.
Then, PAGCOR filed a request for more thorough explanations to be provided on the Court’s ruling on March 15th 2011, which stated that the exclusion of the Philippines-based company from the list of the entities subjected to tax exempt was an amendment.
The latest ruling of the Supreme Court comes as an confession that no distinction was initially made in order to be clarified which income is subjected to corporate income tax. The Court also explained that the corporate income and franchise taxes imposed on the Philippines-based company came as an “undue expansion” of the original ruling of the High Court from March 2011.
