The Philippines’ casino development plans have been dealt a blow by a ruling declaring that operators must pay the country’s 30 percent corporate income tax.
The ruling by the Bureau of Internal Revenue runs counter to the industry’s understanding that casinos would pay only a 5 percent franchise tax as part of the normal 15 percent tax on VIP gaming revenue and 27 percent on mass-market revenue.
The new ruling, which is being discussed by the government and existing and prospective operators, could force some to re-evaluate the market’s profit potential. This is especially significant for the four licensees at Manila’s massive government-sponsored Entertainment City resort complex.
“The low tax level was the magnet that attracted foreign investors to team up with Filipino partners in the gaming business,” said one local expert. “The tax will kill the goose that lays the golden egg.”
The first of the four planned Entertainment City casino hotels, Bloomberry Resorts’ Solaire Resort and Casino, opened on March 16. The other three—Belle Grande Manila Bay, a joint venture involving Macau casino giant Melco Crown Entertainment; Resorts World Bayshore, a joint venture between Genting Hong Kong and the Philippines’ Alliance Global Group; and Universal Entertainment’s Manila Bay Resorts—are expected to open in stages beginning next year and continue over the next several years.
