BIR clears PCSO on tax payment

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The Philippine Charity Sweepstakes Office (PCSO) has been cleared by the Bureau of Internal Revenue (BIR) of any liability in payment of documentary stamp tax (DST) from small town lottery (STL) operations.

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Nina Asuncion of the BIR legal department said the payment of the stamp tax is the sole responsibility of private companies that operate the STL under a contract with the charity.

PCSO General Manager Jose Ferdinand Rojas 2nd said they have not received any “adverse opinion” on the DST from the bureau or the Commission on Audit (COA).

Since their assumption to office in 2010, according to Rojas, they have implemented reforms including the payment of the documentary stamp tax by STL operators.

“We have been strict and prudent in our management of PCSO, including its games and programs,” he said.

STL was established in 2005 under the Arroyo administration to combat jueteng—an illegal numbers game—and be source of funds for PCSO’s social welfare programs including medical assistance and ambulance and medical equipment donations.

Rojas explained that from 2010 to 2012, they have corrected weaknesses they found in the STL and imposed stricter implementing rules and regulations (IRR) in 2014 including the payment of the stamp tax by small town lottery operators.

He said under their supervision, the Sweepstakes office has paid P2 billion in tax arrears and debts left by the Arroyo administration including contributions to government agencies.

The PCSO charter stipulates that revenues collected are divided with 55 percent going to the prize fund for the games, 30 percent for the charity fund and 15 for the operating fund since the charity does not get any budget from the government

A November 2015 memorandum addressed to newly installed PCSO Chairman Erineo “Ayong” Maliksi showed that the 2005 and 2010 IRR provide no provision on the payment of a 10-percent documentary stamp tax.

The same memorandum also showed that STL remittance to the PCSO from 2006 to 2014 did not include the documentary tax.

Meanwhile, the 2014 revised implementing rules and regulations provided for the documentary stamp tax from gross sales of STL games effective only in January 2015.

According to Section 190 of the National Internal Revenue Code, a documentary stamp tax of 10 centavos should be collected on each jai-alai, horse race ticket, lotto and any other authorized numbers game.

Rojas, meanwhile, described the plunder charges filed against him and the PCSO Board as baseless.

“The complaint is malicious and baseless meant to malign the present board for the personal agenda and self-serving interest of certain individuals,” he told a news forum in Manila on Monday.

Rojas said the PCSO Board has introduced reforms since 2010 to improve its charity services and gaming activities, which earned the office a recommendation for an ISO-certification.

“We have implemented long-lasting improvements in procedures and policies and judicious expenditures, among others. PCSO is a small but successful story of our performance and good governance,” he pointed out.

The board faces another plunder complaint before the Ombudsman over non-remittance of documentary stamp tax on STL operations.

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