Duterte urged to certify POGO taxation bill as urgent

The Philippine Amusement and Gaming Corporation (Pagcor) confirmed on Sunday that two POGO firms left the Philippines and more are seen to exit amid tax issues with the government, particularly due to stringent tax rules from the Bureau of Internal Revenue and the impact of movement restrictions amid the coronavirus disease 2019 (Covid-19) pandemic. (File photo: Keenan Constance/Unsplash)

MANILA – Albay Rep. Joey Salceda on Tuesday called on President Rodrigo Duterte to certify as urgent a measure that seeks to impose taxes on Philippine Offshore Gaming Operators (POGOs) in order to hold them liable for their tax obligations.

Salceda made the call after the reported exodus of POGOs due to tax issues, as he warned that some operators may use their closure as a “tactic” to reopen under different declared ownership with the real owners and operators being able to evade previous tax liabilities.

“This development underscores why we need to codify into law our tax regime for POGOs. As I emphasized then when I filed the POGO tax bill, it is important that we codify POGO taxation so that avoiding tax liabilities becomes tax evasion,” Salceda said. “And that allows us a whole host of other implied powers — from the ability to issue hold-departure orders to the ability to use law enforcement to investigate suspected illegal POGO activities.”

The Philippine Amusement and Gaming Corporation (Pagcor) confirmed on Sunday that two POGO firms left the Philippines and more are seen to exit amid tax issues with the government, particularly due to stringent tax rules from the Bureau of Internal Revenue and the impact of movement restrictions amid the coronavirus disease 2019 (Covid-19) pandemic.

Under the current system where Pagcor acts as some sort of “middleman” for the franchise fees of POGOs, Salceda said there is an additional shroud of protection that makes it harder for the government to collect POGO taxes.

“The House, both majority and minority, are behind my POGO tax bill, and I invite the Senate to file their counterpart proposal, and the executive to certify my committee’s report as urgent,” he said.

House Bill 5257, which seeks to impose a 5 percent franchise tax on all offshore gaming companies on gross receipts derived from gaming operations.

It also proposes to set a 25-percent withholding tax on foreign POGO workers with a minimum threshold of PHP600,000 per annum.

Salceda said these proposed tax rates would raise a total of PHP45 billion for the national government.

Last March, Pagcor suspended POGO operations due to the threat posed by Covid-19.

However, the government allowed in May the partial reopening of POGO on conditions that they first settle taxes and obtain clearance from the Bureau of Internal Revenue, pay fees required by Pagcor, and shoulder the Covid-19 testing of its employees.

Only 30 percent of the POGO workforce is allowed to report for work.

Finance Secretary Carlos Dominguez III said his department is already monitoring the tax-evading POGOs that are reportedly operating amid the nationwide implementation of community quarantine.

To date, there are 60 licensed POGOs in the Philippines.

From 2016 to 2019, the revenues collected by Pagcor from POGOs already reached over PHP18 billion.

Last year, the government collected PHP6.4 billion after it ran after tax-deficient POGOs.

Dominguez’s office has also estimated that the government would be able to collect up to PHP20 billion a year in corporate and personal income taxes from POGOs.