PAGCOR Found To Have Underpaid Taxes Whilst Executives Overpaid

July 20, 2018 by Petar Markoski

The Philippine Amusement and Gaming Corporation (PAGCOR) is in hot water after an audit report showed that the gaming regulator had neglected to pay its government-mandated income tax in full, which amounts to 50 percent of its income.

The gaming regulator owes around $396 million to the government which is outstanding taxes that have been underpaid since 2011.

While taxes were underpaid, the audit found that PAGCOR showered its executive staff with unreasonably large allowances and other monetary rewards.

This damning exposition was only part of the annual audit report released by the Commission on Audit, which found that the rewards granted to the executive staff totalled to around Php25 million – which included 18-carat gold rings worth Php13 million awarded to employees that had served the longest. The Commission on Audit (COA) declared this as a gross excess of the legally allowed amount of rewards that can be conferred on staff.

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Questionable Mathematics

The COA had found out that PAGCOR had computed the amount they’d remit to the Bureau of Treasury based on the revenue from their gaming operations – rather than the gross earnings from their operations at large from 2011 to 2017. Consequently, there was an annual deficit of up Php3 billion from the remittance. Additionally, PAGCOR is reported to have paid about Php1.63 billion less than the required amount to the Philippine Sports Commission in 2017.

PAGCOR’s erroneous computations have already been brought up by the COA in its previous audit reports, most recently in 2016. The gaming regulator had either failed or outright neglected to rectify its computations.

The COA report said

The Audit Team also continues to hold its stance that the 50% government share should be computed based on the entire income of PAGCOR and not only on income from gaming operations

PAGCOR’s insufficient compliance to government requirements had recently been the subject of heated debate between them and the COA, as well as their questionable “service excellence” rewards, which were issued without declaration or approval. The COA holds that PAGCOR had exceeded the legally set limits when it comes to perks and allowances, which extends to transportation allowances, cost of living allowances, and loans to employees.

Damage Control

However, despite the COA’s discoveries, they did not give any recommendation as to how to deal with the dilemma; instead opting to implore PAGCOR to report to the Office of the President and clear things up from there, to either gain post-facto approval or recommendations on how to correct their mistakes.