Palace backs DOF: Pogos can be taxed in PH

MANILA, Philippines – Malacañang on Tuesday backed the Department of Finance (DOF) on its position that online casinos or Philippine Offshore Gaming Operations (Pogos) should be taxed.

Presidential spokesperson Salvador Panelo issued the statement a day after Solicitor General Jose Calida said Pogos could not be taxed by the Philippine government.

However, Finance Secretary Carlos Dominguez III countered Calida’s opinion, saying it was not the Office of the Solicitor’s General’s duty to interpret tax laws because it was the “primary jurisdiction” of the Bureau of Internal Revenue (BIR).

READ: DOF counters OSG on Pogos: They can be taxed in PH

Panelo said Malacañang believes “it is the Department of Finance (DOF) which has the primary mandate based on the Administrative Code to formulate, institutionalize and administer fiscal policies in coordination with other concerned subdivisions, agencies and instrumentalities of government.”

“As such, the discretion of the DOF, alongside the Bureau of Internal Revenue (BIR), carries significant weight on matters of taxation,” he said.

Calida earlier said Pogo operators could not be taxed based on the “source of income” rule under the Tax Code of the Philippines.

But Panelo had a different explanation.

“For POGOs that are domestic corporations, they are covered by Section 23 (E), Chapter II of the National Internal Revenue Code (NIRC) and their income shall be subjected to Philippine taxes regardless of whether the same was derived from a source outside of the Philippines,” he said.

“As for those POGOs considered as foreign corporations,” he said, “they too are taxable but only for income which they derived from sources within the country.

He cited that this is pursuant to Section 23 (F), Chapter II of the NIRC.

“With this, we trust that the DOF, together with the BIR, has the competence to evaluate the respective charters and operations of these entities in order to subject them to Philippine taxes in accordance with the law,” he said.

“While the matter is being studied at length by the DOF, what is clear is that the State cannot be denied its right to collect on all applicable taxes on any entity or individual,” he added.

Panelo, who is also the President’s chief legal counsel said that “it has been pronounced by the Supreme Court, in a plethora of cases, that ‘Taxes are the nation’s lifeblood through which government agencies continue to operate and with which the State discharges its functions for the welfare of its constituents.’”

“In order to defray the expenses of the government,” he said, “the State has, among its inherent powers, the authority to tax.”

“This administration will not be stymied nor estopped by technicalities caused by the exploitation of developing technologies in collecting what is due the government,” he added.

Edited by MUF