Casino Players are Not Exempt from Paying the Qualifying Fees Prescribed by E.O. No. 48

December 12, 1994 BIR RULING NO. 175-94 R.A. 7227 000-00 175-94 Subic Bay Resort (HK) Limited (Formerly known as Genting Int'l. Casino Hotel & Resort (1990) Ltd. Building 662, Taft Street Subic Bay Freeport Zone Gentlemen : This refers to your letter addressed to Undersecretary Juanita Amatong, Department of Finance, requesting for confirmation of your opinion that the collection of qualifying fees for players entering the casino pursuant to Executive Order No. 48 does not apply to the Subic Bay Resort & Casino (SBRC); that in its reply, you were advised that "DOF is of the position that since the SBRC obtained its license to operate a Casino from the Philippine Amusement & Gaming Corporation (PAGCOR) it is obligated to observe the rules which PAGCOR casinos are obliged to implement including the collection of P100.00 qualifying fee"; that again you stated in your letter dated February 7, 1994 that the reading of E.O. 48 indicates that the collection of the qualifying fees applies only to casinos operated by PAGCOR; that notwithstanding the fact that Genting obtained its license to operate casino from PAGCOR, SBRC is clearly and actually being operated by GENTING; and that it is your contention that the intention of E.O. 48 in requiring payment of the qualifying fee is to impose a tax because the second "WHEREAS" clause of the side E.O. states that the purpose of the imposition of the qualifying fee is to "raise revenues for the Government"; thus, you submitted that such a tax cannot be charged because even if it is on the individual casino players, and not on GENTING, Republic Act No. 7227 (Bases Conversion and Development Act of 1992) recognizes that the Subic Bay Freeport Zone is a separate customs territory where all transactions are exempted from customs duties and taxes. cdta In reply, please be informed that E.O. No. 48, as implemented by Revenue Regulations (RR) No. 6-93 and Revenue Memorandum Order (RMO) No. 14-93, refers to collection of qualifying fees from players entering PAGCOR casinos wherein a revenue officer is authorized to conduct a spot checking of the issuance of coupon to players entering the casino, to monitor and check the reports of collection, inventory of unissued coupons and to `retrieve the perforated half of the coupon stubs left with the casino, if these are not to be used by PAGCOR anymore. These qualifying fees are to be paid by all players entering the casino upon issuance by PAGCOR of the coupons. In short, they are admission fees paid by players entering the casino so that in case a player temporarily leaves the casino premises and returns within the same day, the revenue officer should make sure that he presents the duly perforated half of the coupon and he or she bears the indelible marking of PAGCOR for that particular day. (RMO No. 14-93) Accordingly, Republic Act No. 7227, which grants exemption to business enterprises registered with the Subic Bay Metropolitan Authority (SBMA) from customs duties and national internal revenue taxes, except the payment of 3% tax on gross income earned payable to the National Government, the 1% payable to the local government units affected by the declaration of the Zone and the 1% payable to the Special Development Fund, prescribed under Section 12(c) of the said Act, does not apply to qualifying fees required to be collected from individual casino players, even if Genting is duly licensed by PAGCOR to operate the SBRC's casino within the Free Port Zone. In other words, casino players are not, exempt from paying the qualifying fees prescribed by E.O. No. 48, as implemented by RR No. 6-93 and RMO No. 14-93. On the other hand, said qualifying fees collected by SBRC's casinos, operated by Genting, shall form part of its gross income for purposes of the preferential tax rate provided for under Section 12(c) of R.A. 7227. cdti Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue