By Lawrence Agcaoili

Philippine Amusement and Gaming Corp. remitted close to P11 billion to the national coffers in 2008 despite a dispute with the Finance Department over the payment of income and value added taxes.

Data from the Bureau of Treasury showed that Pagcor remitted P10.97 billion worth of dividends to the treasury in 2008, up 6.4 percent from P10.31 billion in 2007.

Pagcor as a government-owned and -controlled corporation is required by the Dividend Law to remit as much as 50 percent of its annual gross earnings to the government.

Pagcor, the biggest profit-earner among state-run enterprises, operates a network of gambling casinos across the country.

The Finance Department and the Bureau of Internal Revenue said Pagcor was covered by the minimum corporate income, value added, fringe benefit and other withholding taxes.

They said Pagcor?s unpaid obligations had already reached P6.8 billion, including P5 billion in unpaid VAT and P1.8 billion in the share of unmerited income tax as of end-2007.

The government said the tax incentive of Pagcor had been removed after the reformed VAT law took effect in 2005. The law, according to the Finance Department, also took away the income and VAT exemptions of Pagcor.

Finance argued that Pagcor was also underdeclaring its income that was subject to the 5-percent franchise tax.

However, Pagcor told the Senate committee on ways and means that its contributions to the Social Fund of the Office of the President would be reduced by at least P1 billion if it was forced to pay corporate income tax and value-added tax.

It explained that it would no longer be able to remit any cash contribution to the President?s Social Fund because of a net cash loss.