Gaming sector: PAGCOR issues statement on income tax issue

Gaming sector: PAGCOR issues statement on income tax issue

Agreement finally formalized after more than a year

The Philippine Amusement and Gaming Corporation has entered into an agreement with its 

Entertainment City Licensees, namely: Travellers International Hotel Group (RWM), Bloomberry Resorts 

and Hotels (BLOOM), MCE Leisure (Philippines) Corporation, and Tiger Resorts Leisure and 

Entertainment, Inc., on a mutually beneficial solution to address the additional exposure to income tax 

brought about by Bureau of Internal Revenue (BIR) Revenue Memorandum Circular No. 33-2013 (RMC 

33-2013) dated April 17,2013.

PAGCOR and the Licensees have agreed to adjust the license fees commencing April 1, 2014 by 10 

percentage points of Gross Gaming Revenues. This adjustment will address the RMC 33-2013 which 

imposes corporate income tax on Entertainment City Licensees. This adjustment is a temporary measure 

to address the unilateral BIR action and not intended to modify the Provisional Licenses. 

A positive signal to investors. The agreement between PAGCOR and the licensees sends a positive 

signal to investors that PAGCOR is willing to uphold its Provisional License with the licensees which 

states that the license fees that are to be paid to PAGCOR are “in lieu of all taxes”. We estimate that the 

reduction in license fees will effectively cancel out most the impact of the corporate tax rate, with impact 

varying based on the cost structure of the gaming companies. In addition, we believe that this agreement 

between PAGCOR and the licensees is expected by the public and will not change the fundamentals of 

the gaming companies under our coverage.



-COLfinancial