CTA orders Pagcor to pay P117-M deficiency income tax

By Benjamin Pulta

January 3, 2024, 5:37 pm

MANILA – The Court of Tax Appeals (CTA) en banc has ordered the Philippine Amusement and Gaming Corporation (Pagcor) to pay deficiency income tax for 2005 and 2006 amounting to PHP117 million.

The tax court, in its 22-page ruling dated Dec. 22 and written by Associate Justice Lanee S. Cui-David, also ordered Pagcor to pay delinquency interest pursuant to a 2017 Supreme Court ruling which remanded the case back to the CTA for determination of the final amount to be paid by the firm.

The CTA, in compliance with the SC ruling, ordered the gaming regulatory firm, to pay the basic deficiency income tax worth PHP13.11 million and PHP104.9 million for 2005 and 2006, respectively.

The case originally involved assessments issued by the Bureau of Internal Revenue (BIR) in 2008 in the aggregate amount of PHP5.927 billion for deficiency income tax, value-added tax, and fringe benefit tax (FBT) for 2005 and 2006.

The SC's 2017 decision partly granted Pagcor’s suit and canceled the BIR’s assessment representing deficiency income tax on its income derived from gaming operations and said Pagcor is only liable to pay deficiency income tax from other related activities for the said period and the FBT.

The SC explained that Republic Act 9337 (Value Added Tax Reform Law) did not repeal the tax privilege granted to Pagcor under Presidential Decree 1869 (Pagcor Franchise Law of 1983) but said RA 9337 withdrew Pagcor’s exemption from corporate income tax on its income derived from other related services previously granted under RA 8424 (Tax Reform Act of 1997).

The high court likewise said FBT is not covered by these exemptions. (PNA)