Casino earnings from junket operations subject to 30% corporate income tax

By Jun Ramirez

Earnings of casino from junket operations, or the practice of bringing in foreign high rollers to wager in the country, are subject to 30 percent corporate income tax.

Court of Tax Appeals (MANILA BULLETIN)
Court of Tax Appeals (MANILA BULLETIN)

The Court of Tax Appeals (CTA) issued the decision as it denied the petition of Prime Investment Korea (PIK), seeking refund of income tax paid from the source.

PIK argued that it has been remitting the five percent franchise tax, which was in lieu of other taxes like income as provided under Presidential Decree 1869.

Records showed that the Bureau of Internal Revenue (BIR) collected P24.3 million from PIK out of its earnings of P394 million from junket operations in 2014.

In a 15-page resolution, the court’s Special Second Division explained that franchise tax covered only earnings generated from regular casino operations.

The decision, penned by Associate Justice Juanito Castanedo, Jr., stressed that junket operations have been classified under the same presidential decree, not as regular gaming activity, but “related service” not subject to franchise tax but to the higher corporate income tax.

Besides, it said Republic Act 9337 withdrew the income tax exemption privilege of the Philippine Amusement and Gaming Corporation (Pagcor), hence the it also covered its licensees and contractees.

High rollers consistently wager large sums of money, and receive free-of-charge premium amenities like jet transport, limousine use, best casino rooms and golf privileges.

Insiders disclosed that, in some instances, they are also provided with female escorts during their stay.