Melco Resorts Loses Philippine Tax Claim on Technicality
LISTEN TO THIS ARTICLE:The Philippine Court of Tax Appeals (CTA) has dismissed Melco Resorts and Entertainment's request for a reimbursement of PHP81.12 million ($1.5 million). This claim pertains to the Value Added Tax (VAT) that the company alleges was unlawfully collected during the initial three months of 2016. If the casino and hospitality giant had approached the claim differently, it may have had a valid case.
Million-Dollar Misstep
The claim was rejected by the CTA due to Melco's failure to provide sufficient evidence of timely refund filings. The government agency admitted that the claim was most likely legitimate, but Melco took too long to contest the overpayment.
According to Business World, Associate Judge Lanee S. Cui-David stated that there is no evidence in the record indicating the date when the VAT return was filed. In addition, there was no paperwork to substantiate that the VAT had been the result of purchases from the company's suppliers.
The official stated that the court lacks the authority to determine the timeliness of a petition for review if it seeks reimbursement or compensation for taxes improperly or unlawfully acquired in accordance with the Internal Revenue Code. It was acknowledged that the tax legislation specifies a two-year window for submitting refund claims from the anticipated tax payment.
Melco also tried to claim that it was exempt from taxation based on a presidential decree. However, this wasn't enough to convince the Bureau of Internal Revenue (BIR) to take action.
In regards to the VAT on gambling winnings, the BIR made reference to a note published earlier, emphasizing the absence of available tax rebates. That note states that there's a 12% VAT on all gaming earnings and that these are not eligible for tax credits.
Melco Stock Remains High
Melco just launched City of Dreams Mediterranean in Cyprus, a groundbreaking integrated resort that is reported to be the first in all of Europe. It held the inauguration on July 11, which saw the attendance of Cyprus' president, Nikos Christodoulides, alongside an array of guests and partners.
The new property gives Melco a stronger global position in the gaming industry. Investors are responding nicely, pushing the stock price up 180% over the past year.
Trading on NASDAQ under the ticker MLCO, the stock has risen 10% in the past month. As of yesterday afternoon, it was trading at $13, much higher than the $6.59 it closed at eight months ago.
The stock improvement comes even as Melco has reported drips in revenue. However, the losses aren’t as significant as analysts had predicted. From the second quarter of 2022 through the first quarter of 2023, it recorded consecutive improvements over forecasts, and expects to report revenue topping $3.68 billion for the current fiscal year.
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