SC: Solaire exempted from corporate taxes
THE Bloomberry Resorts and Hotels, Inc.’s ( Bloomberry) exemption from paying corporate income tax as a franchisee of the Philippine - tion (Pagcor).
The decision restrained the Bureau of Internal Revenue (BIR) from implementing a memorandum circular that imposed corporate income taxes on Pagcor’s and its franchisees’ earnings.
Bloomberry operates Resort & Casinos.
The High Court held that Presidential Decree (PD) No. 1869 or the Pagcor Charter clearly states that Pagcor is liable only to pay gross revenues “in lieu of all taxes of any kind or form, as well as fees, charges or levies of whatever nature, which necessarily include corporate income tax.”
“There was no need for Congress to grant tax exemption to [Pagcor] with respect to its income from gaming operations as the same is already exempted from all taxes of any kind or form, income or otherwise, whether national or local, under its Charter, save only for the
The exemption, the SC said, extended to Pagcor’s licensees, such as Bloomberry and its parent company, Sureste Properties, Inc.
“Bloomberry and its parent company, Sureste Properties, Inc., own and operate Solaire Resort & Casirto. Thus, being one of its licensees, petitioner only pays Pagcor license fees, in lieu of all taxes, as contained in its provisional license and consistent with the Decree ( PD) No. 1869, which Solaire provides the exemption from taxes of persons or entities contracting - tions,” the SC said.
The case stemmed from BIR’s issuance of revenue memorandum circular (RMC) No. 33-2013 which declared that Pagcor, in addition imposed on its gross revenue under Section 13(2) of PD No. 1869, is likewise subject to corporate income tax under the National Internal Revenue Code (NIRC).
RMC No. 33-2013 was issued pursuant to Republic Act ( RA) 9337 which amended Section 27(C) of the NIRC, thus, removing of government-owned and controlled corporations exempt from paying corporate income tax.
The said circular also provided that Pagcor’s licensees, being entities duly authorized and licensed by it to perform gambling casinos, gaming clubs and other similar recreation or amusement places, and gaming pools, are likewise subject to income tax under the NIRC, as amended.
Prior to the passage of RA 9337, Pagcor and its licensees were franchise tax on its gross revenue pursuant to PD No. 1869 or the Pagcor Charter.
Owing to the conundrum posed by the passage of RA 9337 and the subsequent issuance of RMC No. before the SC which sought the It argued that the circular violated the equal protection and nonimpairment of contracts clauses of the constitution.