THE Bureau of Internal Revenue (BIR) reported to the House Committee on Ways and Means that it has managed to collect P1.79 billion from Philippine Offshore Gaming Operators (Pogos) in January to September.
However, House Committee on Ways and Means Chairman Joey Sarte Salceda said the amount is “a far cry” from the agency’s target of collecting P2 billion a month in withholding taxes from Pogo workers.
At P2 billion a month, Salceda said tax collection from Pogos should hit P24 billion a year.
“Why would we allow Pogos if we can’t tax them? I support the proposal of Minority Leader Bienvenido Abante Jr. to ban Philippine offshore gaming operations if they refuse to be taxed by the government,” said Salceda following the first hearing on his bill slapping Pogos with a 5-percent franchise tax and 15-percent income tax last Monday.
Abante said he wants to the ban Pogos. “If we are not going to really tax the Pogo thing, let’s scrap it altogether.”
The
Philippine Amusement and Gaming Corp. (Pagcor) Senior Manager for Policy
Development, Jessa Fernandez, told lawmakers that collecting more taxes from
Pogos may discourage them from setting up shop and this could affect government
revenues.
Currently, the BIR said there are 218 Pogo service providers and 60 Pagcor-registered Pogos operating in the Philippines.
The tax agency said it has issued least 164 letter notices to service providers with total estimated final withholding tax liabilities of P25.13 billion.
Citing Pagcor data, the BIR said 86,172 individuals are currently employed by Pogo service providers. Of the total 14,829, or 17 percent, are Filipinos, while 71,343, or 83 percent, are foreigners. Of the number of foreigners employed by these service providers, the BIR said 62,726, or 88 percent, are Chinese.
Pogo tax bill
Salceda, author of the Pogo tax bill, said it is necessary to determine the taxability of Pogos given their proliferation in the country in recent years.
The lawmaker said his proposal taxing Pogos will give the government an additional revenue of P46 billion.
“While the BIR has issued Revenue Memorandum Circular 102-2017 which clarified the tax treatment for these facilities and associated services, a law that settles questions of taxability, through amendments in the National Revenue Code, will once and for all address confusion on the taxation of this emerging industry,” he said.
Salceda added that the measure seeks to definitively answer that Pogos indeed do business in the country, as the services are rendered in the country. The bill also intends to clarify the taxability of Pogo employees. Salceda argued that because Pogos are companies doing business in the country, their employees’ income shall be subject to tax.
He said a clear definitive tax regime for Pogos will be a potent revenue source. It will also be a means of placing these facilities under stricter oversight—failure to faithfully report revenues and expenses will constitute tax evasion.
“Codifying the tax regime for Pogos will provide the government a broader set of levers with which to monitor and oversee the industry and to stabilize the gyrations in tax revenue intake and enforcement,” said Salceda.
Among the amendments proposed by the bill is the imposition of a tax of 15 percent on the salaries of foreigners employed and assigned in the Philippines by an offshore gaming licensee. The tax rate will apply to foreigners earning a minimum gross annual income of P250,000.
House Bill 5267 also proposes an additional tax on franchises. Specifically, there shall be an additional tax of 5 percent on all offshore gaming companies on gross receipts derived from gaming operations covered by the law granting the franchise, on top of the taxes already imposed under the National Internal Revenue Code.
House Committee on Economic Affairs Chairman Sharon Garin of AAMBIS-OWA said the proper taxation of Pogos will give be a boon to the Philippines.
Citing recent reports, Garin said the country is one of the few Southeast Asian countries that allow offshore gaming. “This is a big chance for our country, actually, to gain ground in this industry. It’s expected to be a $60-billion industry.”
Image credits: Nonie Reyes