THE House of Representatives is drafting a bill that imposes a presumptive corporate income tax of $1,000 per seat on Philippine offshore gaming operators (Pogos), a move projected to add at least P25 billion to the government’s coffers.
House Committee on Ways and Means Chairman Joey Salceda said this bill, which will be filed soon, will act as the country’s “circuit breaker,” which can reduce the systemic risk of Pogos to the country’s economy. According to Salceda, the Pogo industry contributes 1.5 percent to the country’s GDP.
Salceda, an economist, said his bill will include “best” measures “to control the wild gyrations, potential wild gyrations” of Pogos.
“One, we are imposing a presumptive corporate income tax of $1,000. This could raise [at least] P25 billion,” he said.
Salceda said the House wants the Bureau of Internal Revenue (BIR) to collect at least P76 billion in withholding tax from Pogos.
“So that is about P101 billion per year in incremental revenues. Because last year, they [Pogos] were paying only P300 million in franchise [fees] to Pagcor [Philippine Amusement and Gaming Corp.].
The money is on top of what is paid to Pagcor plus they pay P378 million in employee withholding tax,” he said.
“[Pogo] employees are paid through PayPal, so essentially [payments made to them] are very difficult to monitor,” Salceda added.
The lawmaker said the bill will require the Bangko Sentral ng Pilipinas to include Pogos as a separate item in the Balance of Payments account under service exports.
“I have requested the PSA [Philippine Statistics Authority] to have a separate line under services for Pogos, just like BPOs [business-process outsourcing] that has a separate item,” Salceda said.
“In a way this will legitimize Pogo operations, not just the grant of franchise by Pagcor. This provides a platform for the industry, a more solid platform,” he added.
Citing its initial list, the Department of Finance (DOF) said there are some 138,000 foreigners working in Pogos, 54,241 of whom have been given alien employment permits. The remaining 83,760 have special working permits.
Last month, the DOF ordered the Bureau of Internal Revenue (BIR) to shut down the operations of Pogos, as well as service providers that fail or 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 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.