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PAGCOR found to have underpaid tax, overpaid executives in damning audit report

Thursday, 19 July 2018 06:44
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Philippines gaming regulator PAGCOR has been accused of granting excessive rewards and allowances to its executive staff while underpaying its mandatory 50% government income share to the tune of Php21.19 billion (US$396 million) since 2011.

The revelations form part of the Commission on Audit’s annual audit report, released this week, which found that PAGCOR had granted cash and gift rewards to officials worth a total of Php12.5 million in 2017 as well as another Php13 million worth of 18-carat gold rings to long-serving employees, which was “in excess of the amount allowed” by law.

Likewise, the COA said PAGCOR had calculated the remittance due to the Bureau of Treasury on income solely from gaming operations rather than from “aggregate gross earnings” over the course of seven years from 2011 to 2017, resulting in an annual shortfall of around Php3 billion. PAGCOR was also found to have underpaid the Philippine Sports Commission by Php1.63 billion in 2017.

Notably, the COA said it had previously raised the issue of PAGCOR’s calculation methods in its 2016 audit report but that the gaming regulator had failed to make any adjustments.  

“The COA 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,” it said.

The report suggests there is ongoing disagreement between the COA and PAGCOR as to the gaming regulator’s requirements, with a number of rewards for “service excellence” granted to officials without submitting details to the government first for review and approval.

The COA also said that PAGCOR had exceeded its authorized limits in regards to multiple perks including a Representation and Transportation Allowance, the Cost of Living Allowance, car plans and financial loans to PAGCOR officials.

Despite the damning report, the COA didn’t recommend any particular action be taken against PAGCOR, but instead said it has asked PAGCOR to seek clarification from the Office of the President.

“We recommended and management agreed to seek post facto approval from the Office of the President to avoid possible audit suspensions and/or disallowance,” the COA said.

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