POGOs must pay franchise tax -- Barbers

A House leader disputed claims of some Philippine Offshore Gaming Operators (POGO) that they are not subject to 5 percent franchise tax.

Chairman of the House committee on dangerous drugs and Surigao del Norte Rep. Robert Ace Barbers said POGO should pay this type of tax.

Barbers said there is no question that all Philippine Amusement and Gaming Corporation (Pagcor)-licensed POGOs, even if they are foreign-based and have no physical office here, “are clearly subject to a 5 percent franchise tax.”

To date, there are at least 60 Pagcor-licensed POGOs but only 10 of them are registered with the Securities and Exchange Commission (SEC) and have physical presence in the country.

All these Pagcor-licensed POGOs, including the 10 that are registered with the SEC, are either domestic or foreign corporation registered to do business in the Philippines,” Barbers said,

As to the foreign-based POGO firms not registered with SEC, the Mindanon solon said they should also be subject to the 5 percent franchise tax because they are actually operating and doing business in the Philippines.

“These non-SEC registered POGOs cannot deny the fact that they have brought in their equipment, rented or bought office facilities, and have employees working in the Philippines. Thus, they cannot claim they have no physical presence here,” Barbers said.

Under Presidential Decree No. 1869, also known as the Pagcor charter, the licenses granted for gaming firms to operate expressly provides for payment of 5 percent franchise fees to all its licensees.

“The law (PD 1869) provides no distinction between a domestic and a foreign or offshore corporation. Also, there is a principle in law that a tax legislation should be construed in favor of imposing the tax for the benefit of the state,” Barbers said.

“I therefore believe that there is no legal issue for the Bureau of Internal Revenue (BIR) to impose and collect franchise tax to all POGOs be it domestic or offshore,” he added.

The BIR has reported that majority of the POGOs have failed to pay at least P50 billion in taxes since 2019.

Last year, Solicitor General Jose Calida said foreign-based companies in the offshore gaming sector, whose income is derived from bets outside the Philippines, are not subject to tax in the Philippines.

Barbers earlier asked top officials of the Bureau of Immigration (BI) and the Department of Labor and Employment (DOLE) to make public the immigration status and the whereabouts or deployment of some 170,000 alleged ‘excess” POGO workers who entered the country since 2017.