Solon: Licensed POGOs subject to franchise tax

A HOUSE leader on Monday disputed the claims of some Philippine Offshore Gaming Operators (POGOs), which was anchored on the legal opinion of the Office of the Solicitor General (OSG), that foreign-based gaming firms operating in the Philippines are not subject to five percent franchise tax.

Surigao del Norte Rep. Robert Ace Barbers, chairman of the House committee on dangerous drugs, 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 five percent franchise tax.”

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, “and there is no question that they are clearly subject to five percent franchise tax.”

As to the foreign-based POGO firms not registered with SEC, the lawmaker from Surigao del Norte said they should also be subject to the five 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,” said Barbers.

Under Presidential Decree (PD) No. 1869, also known as the PAGCOR charter, the licenses granted for gaming firms to operate expressly provides for payment of five 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.

Earlier, the Department of Finance (DoF), thru Assistant Secretary Antonio Lambino, said the DoF maintains that POGOs, whether based locally or abroad, must pay a five percent franchise tax.

But the POGOs, he said, are using the OSG’s legal opinion to defend their position.

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.

He said the public, for a long time, had been kept blind on the real number of Chinese nationals who arrived to work supposedly as POGO workers that were granted visa-upon-arrival and work permits by the concerned government agencies.

“Aside from these “excess” POGO workers’ whereabouts or deployment, Iam also deeply concerned on the status of the cases of a number of POGO workers caught by law enforcers for involvement in prostitution, women trafficking, drug manufacture and trafficking, drug den operation, online fraud, forging of Philippine passports, money laundering, operating illegal health clinics, among other criminal acts,” he said.