House measures eye tax on POGO firms, workers

November 15, 2019

THE House Committee on Ways and Means has started discussing measures that seek to tax companies and workers engaged or involved in Philippine offshore gaming operations (POGOs).

One of the measures is House Bill 5267 filed by committee chairman and Albay Rep. Joey Sarte Salceda in which he underscored the need to determine the taxability of POGOs which have been proliferating in the country in recent years.

“While the Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular No. 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,” Salceda said.

Salceda added that the measure seeks to definitively establish 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.

Further, 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,” Salceda said.

Among the amendments proposed by the bill is the imposition of a tax of 15 percent of the salary received by an alien individual who is a permanent resident of a foreign country and who is employed and assigned in the Philippines by an offshore gaming licensee. It also sets that P250,000 shall be the minimum gross annual income.

HB 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 NIRC.

During the meeting, Rep. Sharon Garin (Party-list, AAMBIS-OWA) highlighted that proper taxation of the POGO industry stands to be an economic boon to the Philippines. Citing recent reports, Garin stated that 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 US$60-billion industry. Kaya lang, kung hindi tayo kumikita, walang silbi sa atin,” she said.

Meanwhile, Rep. Abdullah Dimaporo (2nd District, Lanao del Norte) urged the Philippine Amusement and Gaming Corporation (PAGCOR) to root out illegal POGOs.

“Our concern is for them to pay us taxes. We are supposed to be doing this so our economy can benefit… We are getting very small, if it is true that there are millions of workers in POGO and there are many POGO establishments in the Philippines that your agency doesn’t know of because you don’t properly do your work,” Dimaporo said.