Bloomberry Resorts Corporation, operator of Manila’s Solaire Resort Entertainment City, says it plans to challenge a decision by the Philippines’ Court of Tax Appeals ordering the company to pay Php49 million (US$876,000) in outstanding Documentary Stamp Tax (DST) on loans and advances provided to its South Korean subsidiaries.
According to a report by GMA Network, the decision was handed down by the Court this week, which ruled that loans and advances provided to Solaire Korea Co Ltd and Golden & Luxury Co Ltd – both linked to its Korean casino operation Jeju Sun Hotel and Casino – were subject to the tax as per the Philippines tax code.
Bloomberry had argued that these loans and advances were not subject to the code because the recipients are not residents of the Philippines and therefore those loans and advances were not an “obligation or right arising from Philippine sources.” It also argued that the funds in question were used for the gaming operations of Jeju Sun by its subsidiaries, which are non-resident foreign corporations operating outside the Philippines.
However, the court’s 37-page ruling determined that, “Based on the foregoing, all loan agreements, whether made or signed in the Philippines or abroad, when the obligation or right arises from Philippine sources or the property or object of the contract is located in the Philippines, shall be subject to the payment of DST.”
It added that Bloomberry’s contention “fails to persuade”.
“Its (Bloomberry) involvement as an obligee made the transaction one that arises from Philippine sources under Section 173. Thus, even if the obligors are non-resident foreign corporations, since the petitioner, the obligee, is a domestic corporation organized under Philippine laws, the said loans and advances clearly involve ‘obligation or right arising from Philippine sources’,” the court explained.
Documentary Stamp Tax is described by the Bureau of Internal Revenue as “a tax on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, right or property incident thereto.”
In a Wednesday filing referencing the GMA Network report, Bloomberry acknowledged the court’s findings but said it plans to file a motion for reconsideration to challenge the decision. It also pointed out that the outcome of this case is not material to the company’s operations.
The decision by the Court of Tax Appeals comes after the recently re-opened Jeju Sun recorded gross gaming revenues of Php1.2 million (US$21,500) in 1Q23, reversing a GGR loss of Php8.5 million (US$153,000) in the December quarter.
It was, however, a far more impressive result at Solaire where GGR climbed 80% year-on-year and 9% sequentially to Php16.0 billion (US$287 million), with Bloomberry booking net income of Php3.0 billion (US$54 million).
