BIR Ruling No. 317-2020

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City

BIR Ruling No. 0383-2019 Presidential Decree (PD No. Act (RA) No.9487 1869, as amended by Republic 0T-0317-2020 JUN T 9 2020

Unit 2704-C West Tower PSE Centre, Exchange Road, Pasig City VENTURANZA, HOSTALERO AND COMPANY, CPAS

Attention: ATTY. THADDEUS E. VENTURANZA

Gentlemen:

Gaming Corporation (PAGCOR) pursuant to Presidential Decree (PD)No. 1869, as amended ("BAC? for brevity), for a ruling on the preferential tax rate (which includes income tax and by Republic Act (RA) No.9487. value added tax [VAT]) extended to grantees and licensees of the Philippine Amusement and This refers to your request on behalf of BINGO AMUSEMENTS CORPORATION

sports and/or games; that it is a holder of a Gaming License for its Bingo Games operations which was issued by PAGCOR pursuant to PD No. 1869, as amended by RA No. 9487, to wit: kind; erect amusement enterprises in all the branches pertaining to said amusement places; to purchase, lease or otherwise acquire, own and operate computers, machines, equipment, in, produce, operate, manage, control and conduct any and all manner of indoor and outdoor Philippines, the primary purpose of which is to establish and conduct general amusement sell, lease, let, own and manage places of exhibitions, games, contests and amusements of every buy, lease, option or otherwise acquire, hold, exchange, sell or otherwise dispose of and deal in real estate of buildings for the erection of and establishment of such amusement places: vehicles and all appliances and accessories necessary for said purpose; and generally to engage Kaunlaran, Quezon City, is a corporation duly organized under the laws of the Republic of the enterprise and provide amusement to the general public; acquire, establish, own, hold, sell lease, conduct and manage amusement enterprises of every kind; purchase, acquire, develop. Documents submitted that BAC, with Taxpayer's Identification Number (TIN) and principal office address at 3/F Marsk Bldg., Aurora Blvd. cor. Balete Drive.

Gaming License Reg. No. Gaming Activity Bingo Games Commonwealth Avenue, Quezon City Ever Gotesco Commonwealth, Gaming Site Issuance June l0, Date of 2019 Expiration Sept. 24. Date of 2021

and that Revenue District No. 40, Cubao, Quezon City, issued a Certification stating that BAC has no outstanding Letter of Authority (LOA) as of December 23, 2019.

RA No. 9487, provides, viz: In reply, please be informed that Section 13(2)(b) of PD No. 1869, as amended by

"SEC. 13. Exemptions.

(2) Income and other taxes -(a) Franchise Holder: No tax of any kind or form, income or otherwise, as well as fees, charges or levies of whatever nature.

BINGO AMUSEMENTS CORPORATION 0T-0317-2020 JUN 0 9 2020

description, levied, established or collected by any municipal, provincial, whether National or Local, shall be assessed and collected under this due and pavable quarterly to the National Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or or national government authority. attach in any way to the earnings of the Corporation, except a Franchise Tax of five (5%) percent of the gross revenue or earnings derived by the Corporation from its operation under this Franchise. Such tax shall be Franchise from the Corporation, nor shall any form of tax or charge

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(b) Others: The exemption herein granted for earnings derived from the payment of any tax, income or otherwise, as well as any form of corporation(s), association(s), agency(ies), or individual(s) with operations conducted under the franchise, specifically from the charges, fees or levies, shall inure to the benefit of and extend to whom the Corporation or operator has any contractual relationship in connection with the operations of the casino(s) authorized to be conducted under this Franchise and to those and/or technical services rendered to the Corporation or operator. " (Emphasis and underscoring supplied) receiving compensation or other remuneration from the Corporation or operator as a result of essential facilities furnished

amended by RA No. 9487, to PAGCOR's licensees. Thus, the Supreme Court ruled that: Supreme Court affirmed the applicability of the tax exemption provisions of PD No. 1869, as In the case of Bloomberry Resorts and Hotels, Inc. vs. Bureau of Internal Revenue', the

operations of the casino(s) authorized to be conducted under this Franchise, so it must be that all contractees and licensees of PAGCOR, upon payment of the 5% franchise tax, shall likewise be exempted from all other taxes, including corporate income tax realized from the operation of casinos. granted for earnings derived from the operations conducted under the franchise form of charges, fees or levies, shall inure to the benefit of and extend to corporation(s), association(s), agency(ies), or individual(s) with whom the PAGCOR or operator has any contractual relationship in connection with the specifically from the payment of any tax, income or otherwise, as well as any "As the PAGCOR Charter states in unequivocal terms that exemptions

subject to corporate income tax for "other related services", we find it logical that its contractees and licensees shall likewise pay corporate income tax for income derived from such "related services. Decision of the Court sitting En Banc in G.R. No. 215427 that PAGCOR is For the same reasons that made us conclude in the December 10. 2014

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from its gaming operations of gambling casinos, gaming clubs and other similar recreation or amusement places, and gaming pools, defined within the purview of the aforesaid section, is not subject to corporate income tax. (Emphasis supplied and underscoring supplied) Plainly, too, upon payment of the 5% franchise tax, petitioner's income

Revenue Code of 1997, as amended, provides: With regard to the VAT exemption of BAC, Section 109 (1) (K) of the National Internal

1 G.R. No. 212530 dated August 10, 2016.

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BINGO AMUSEMENTS CORPORATION OT-0317-2U20 jUN 0 9 2020

Subsection (2) hereof, the following transactions shall be exempt from the value-added tax: "SEC. 109.Exempt Transactions. - (1) Subject to the provisions of

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which the Philippines is a signatory or under special laws, except those under Presidential Decree No. 529; (Emphasis supplied) (K) Transactions which are exempt under international agreements to

PAGCOR's charter, PD 1869, is a special law that grants the latter exemption from taxes and such exemptions extend or inure to the benefit of its licensees.2 Thus, PAGCOR and its licensees are exempt from the payment of VAT because

License for its Bingo Games operations issued by PAGCOR, the exemption from taxes, fees and_charges enjoyed by PAGCOR is extended to BAC pursuant to Section 13 (2) (b) of PD No. 1869, as amended by RA No. 9487. Therefore, the income derived by BAC solely from its Bingo Games operations at Ever Gotesco Commonwealth, Commonwealth Avenue, Quezon City, during the validity of its Gaming License, is subject only to the 5% franchise tax, and shall be exempted from corporate income tax and VAT. Premises considered, this Office hereby rules that since BAC is a holder of a Gaming

realized by BAC from related services or such services not falling under gaming operations, shall be subject to corporate income tax and VAT.3 However, for the purpose of applying the 5% franchise tax, any income that may be

if upon investigation, it shall be disclosed that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented. However.

Very truly yours,

Waesanlva

Commissioner of Internal Revenue CAESAR R. DULAY

K-1-LMAT 035385 O

Philippine Amusement and Gaming Corporation vs. Bureau of Internal Revenue,G.R.No. 172087 dated March 15.2011 3 Section 145) of PD No. 1869, as amended by RA No. 9487.

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