Palace: Pogos can be taxed

Malacañang has expressed support for the Department of Finance’s (DOF) position that taxes can be imposed on Philippine offshore gaming operators (Pogos), arguing that the State cannot be denied its due.

“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,” presidential spokesperson Salvador Panelo said in a statement.

The Palace said taxes were a nation’s lifeblood and that the government won’t be hindered by technicalities and developing technologies in collecting what is due the State.

Panelo made the remarks following the contradicting statements of the DOF and the Office of the Solicitor General (OSG) on the taxability of Pogos.

A House panel earlier approved a bill filed by Albay Rep. Joey Salceda seeking the imposition of a five percent franchise tax on Pogos. The measure is seen to raise P45 billion a year.

Under the bill, Pogo workers will also have to pay a 25 percent tax on their income.

Solicitor General Jose Calida said Pogos could not be taxed based on the principle of source of income, because bets were made outside the Philippines even if Pogos were based in the country.

Finance Secretary Carlos Dominguez III, however, disputed Calida’s opinion, arguing that the earnings of Pogos are taxable.

“For Pogos that are domestic corporations, they are covered by Section 23 (E), Chapter 2 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,” Panelo said.

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

As for Pogo workers, “their compensation, salaries or wages for the services they render here are considered taxable income under Section 23 (A) and (D) of the NIRC,” he said.

Panelo said the DOF and the Bureau of Internal Revenue were expected to have “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.”

The OSG’s take on the matter was “subject to change, depending on the elaboration of factual circumstances,” Panelo said. But “to defray the expenses of the government, the State has, among its inherent powers, the authority to tax,” he added.