By Bianca Cuaresma & Samuel P. Medenilla
The Bureau of Internal Revenue (BIR) has been ordered to shut down the operations of Philippine Offshore Gaming Operators (POGOs), as well as service providers that fail or will refuse to pay the tax liabilities of their foreign workers.
Finance Secretary Carlos G. Dominguez said he issued the order to the BIR, an attached agency of the Department of Finance (DOF), due to the slow pace of collecting withholding income taxes from POGOs despite the issuance of 130 letter-notices to these firms. The POGOs’ collective tax liabilities amounted to P21.62 billion.
“Why don’t we start closing them down so they will answer these assessments,” Dominguez said during a recent meeting of the DOF-Executive Committee (Execom). “Those who don’t pay or respond to your assessments, clamp them down.”
At the same meeting, Dominguez said he asked the BIR to ensure that the tax liabilities payment should account for each foreign worker in POGOs and to reject any “lump-sum” offer or any other arrangement in paying their tax arrears.
“The collection should be per individual,” the Finance chief said. “You force the issue and you bring them to court. I mean, close them down,” Dominguez told BIR officials.
BIR Deputy Commissioner Arnel Guballa reported that POGO service providers paid P175 million in withholding taxes in 2017 and P579 million in 2018. From January to August, the BIR collected P1.4 billion from POGOs, representing a 242-percent increase from the previous year’s collections, Guballa said.
However, Guballa said his office alone cannot do the job of padlocking errant POGOs and asked the assistance of the Department of Labor and Employment (DOLE), the Bureau of Immigration (BI) and the Philippine Amusement and Gaming Corp. (Pagcor) in closing down errant POGOs.
Just last month, Bangko Sentral ng Pilipinas Benjamin E. Diokno said the BSP financial stability team and the Anti-Money Laundering Council (AMLC) will also investigate the impact of discontinuing the POGO in the Philippines.
“We are looking at the economic risks of having POGOs here. One of our mandates is financial stability. [Finance] Secretary [Carlos] Dominguez’s concern is the tax component. Mine is financial stability,” Diokno said.
The Trade Union Congress of the Philippines, the country’s largest labor group, called for the creation of a new “coordinating body” to monitor the expected surge in the number of foreign nationals in POGOs.
TUCP President Raymond Mendoza said his group is anticipating that more POGOs managed by foreign nationals will set up shop in the Philippines after Cambodia banned onling gambling, which caters to the Chinese market.
Mendoza said the government might “lose control” of regulating POGOs due to its many facets including real estate, immigration, taxes and employment.
“Government agencies have limited authority and they cease to function on area that is beyond their mandate,” he said.
The labor leader is now proposing for the creation of a multi-stakeholder body to create policies for POGOs in the country.
“The proposed coordinating body is composed of different concerned government agencies along representatives from labor and business sectors attached to the Office of the President,” Mendoza said.
Bureau of Local Employment (BLE) Director Domique R. Tutay said the anticipated mass migration of foreign nationals from Cambodia to the country is unlikely due to the prevailing moratorium imposed by the Pagcor in licensing new POGO firms.
“This means the number of POGO workers at the moment based on the statistics we have released. The most could be at the 100,000 to 130,000 level,” Tutay told the BusinessMirror via SMS.
Also, she said the proposed coordinating body may no longer be necessary since there is an inter-agency task force, consisting of the DOF, Department of Justice, BI and the DOLE, is already regulating POGOs.
In fact, the said task force released two inter-agency issuances to address the gaps in government regulations related to POGOs.
“These policies are already in place to handle concerns on various permits, authorities, visas, tax and security,” Tutay said.
The government is expected to reap more revenues from the POGOs in the country as it starts taxing foreign nationals in their employ this year.
Despite the expected revenues from POGOs, Sen. Emmanuel Joel J. Villanueva said he is still unconvinced that these firms are beneficial for the country.
“As it stands, the setup of POGOs is fertile ground for illicit activities, such as money laundering, and its continuing presence here entices fugitives from China to secure a safe haven here in our country,” Villanueva said in a statement. “Any supposed benefits from this sector are fruits of a poisoned tree.”
He cited the 277 Chinese nationals, who were recently apprehended by immigration authorities, as proof of this.
The lawmaker said he will continue to press for a senate investigation into the matter to establish the possible “ill effects of POGOs to Philippine society.”
Mendoza also raised the same concern and said the TUCP will conduct its own study on the “economic and social implications in the community including the employment, living and working conditions of Chinese POGO workers in the country.”