By Samuel P. Medenilla & Jovee Marie N. dela Cruz
FOREIGN nationals (FN) employed by Philippine Offshore Gaming Operators (POGOs) that will shut down their local operations will automatically lose their work permits.
This, as the chairman of the House Committee on Ways and Means on Tuesday asked the government to closely monitor the exiting POGOs, as their closure may be used by some as a “tactic” to reopen under a different declared ownership.
The Department of Labor and Employment (DOLE) issued the reminder on the automatic loss of the FN’s work permits amid reports that two POGO firms are now eyeing to end their domestic operations due to tax issues.
“Their [permits] will be canceled automatically. They will no longer have the right to work since their operator will leave [the country],” said Labor Secretary Silvestre H. Bello III on Tuesday.
However, he said the affected FNs could apply with other remaining POGO firms that are compliant with local regulations and are paying the right taxes.
FNs who will be working in the country for more than six months, or for certain industries like POGOs, are required to get an Alien Employment Permit (AEP) from DOLE.
As of May, DOLE reported there were 18,701 AEP holders in the POGO industry.
The Philippine Amusement and Gaming Corp. (Pagcor) earlier announced that offshore licensee SC World Development Group Ltd.—a unit of Macau’s gambling giant SunCity Group—and Don Tencess Asian Services Solutions Inc., a local licensee, are now in the processing of ceasing their operations in the country.
The Department of Finance (DOF), however, maintained that both companies will still be required to pay their tax dues even if they shut down their operations.
For his part, Bello said they are still awaiting Pagcor’s report on the said closure of the two POGO firms.
Sentro ng mga Nagkakaisa at Progresibong Manggagawa (Sentro) urged DOLE to ensure all of workers, including FNs, who will be affected by the closures, will be given government aid.
“Reports say that some 140,000 workers will be affected by these closures, and at least 108,00 of them are foreign workers,” Sentro Chairman Daniel L. Edralin said in a statement.
“The foreign workers affected by the closure of POGOs should also be taken care of as our affected migrant workers deserve humane treatment in their respective countries of work if they are to be repatriated,” he added.
Ruse to evade taxes
In urging the government to track the POGOs that have expressed intent to exit the country, Albay Rep. Joey Sarte Salceda, the House Ways and Means panel chairman, said, “[They may do this reopening] under different ownership with the real owners and operators being able to evade previous tax liabilities.”
Earlier, the lawmaker said the estimated tax liabilities of POGOs are now at P42 billion.
SC World Development Group Ltd., is one of the two POGOs identified by the Philippine Amusement and Gaming Corp. (Pagcor) that have officially asked for cancellation of their offshore gaming licenses, according to reports.
Aside from SC World Development Group Ltd., another POGO reported to be exiting the country is Don Tencess Asian Solutions Inc.
Also, Pagcor said 13 other service providers were also reported to have also closed down their operations and more will likely follow suit due to stringent tax rules from the BIR and the impact of movement restrictions amid the Covid-19 pandemic.
But the Department of Finance said these POGOs are not yet off the hook as the government vowed it will still go after its tax dues.
Also, Salceda said POGOs will still be liable under Philippine law as withholding agents of their income tax liabilities.
“At the same time, 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,” he said.
“It is important that we codify POGO taxation so that avoiding tax liabilities becomes tax evasion, 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,” Salceda added.
Under the current system where Pagcor acts as some sort of a 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.
Salceda’s House Bill 5267 would require POGOs to pay a 5-percent tax on gross receipts from their operations covered by the law granting their franchise.
Also, foreign employees working for POGOs would be presumed to earn P600,000 and pay a 25-percent tax on their salaries, wages, annuities, compensation, remuneration, honoraria, and allowances.
In May, the government allowed the partial resumption of operations of POGOs in an attempt to raise some revenues while several parts of the country remain under lockdown in a bid to curb the spread of Covid-19, but POGOs that were deemed not tax-compliant were prohibited from resuming their operations.
POGOs, however, are insisting that they are not liable to pay the 5-percent franchise tax since they are an offshore business.
Image credits: Nonie Reyes
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