POGOs like BPO? Drilon warns gov’t might lose billion-pesos worth of franchise tax

MANILA, Philippines — Senate Minority Leader Franklin Drilon on Monday warned that the government stands to lose billions of pesos in franchise tax if the Philippine Offshore Gaming Operators (Pogo) are treated as business process outsourcing (BPO).

Presidential spokesman Harry Roque, in justifying the resumption of Pogo operations, said that the nature of their business may be likened to BPOs companies.

But Drilon said Pogos may use this reasoning as a “defense” against paying the five percent franchise tax imposed by the government as a gaming entity. It could also hinder efforts to collect franchise tax owed to the government in 2019 by most of the 60 licensed online gaming operators.

“The Pogos can use the statement as a defense against paying the five percent franchise tax being imposed by the government. It will also put at risk the license fee being collected by the Philippine Amusement and Gaming Corporation (Pagcor),” Drilon said in a statement.

“If Pogos are considered BPOs, then there would be no need to pay the franchise tax and the license fee,” he added.

Pogos, Drilon pointed out, can only engage in the gambling business upon the grant of a license or franchise from the Pagcor, for which they must pay a corresponding franchise tax as a gaming operator.

“Hindi na nga nagbabayad ng buwis. Ngayon gusto pa yatang bigyan ng incentives tulad ng totoong BPOs,” he added.

(They are not paying taxes and now it seems like the government wants to give them incentives similar to true BPOs.

The Bureau of Internal Revenue (BIR) earlier disclosed that majority of the 60 licensed PHOS owed the government around P50 billion in unpaid taxes in 2019.

“The BIR is already having difficulty collecting taxes from POGOs as it is. With the statement putting them in the same league as BPOs, even the collection of the franchise tax could be put in peril,” Drilon warned.

“We hope that officials of the administration will refrain from issuing statements that could further undermine the efforts exerted by the agency in collecting unpaid taxes from Pogos,” he added.

The Philippine government earlier allowed the resumption of partial operations of Pogos, as they are an essential industry and considered as BPOs.

To claim that Pogos are BPO companies is insulting to the industry, Drilon said.

He explained rules and regulations for Pogos issued by the Pagcor in September 2016 is clear – Pogos are engaged in the ”game of chance” business.

“Pogos are engaged in gambling. Period. Hence, they should be subject to the same rules that other gambling establishments are subjected to,” the senator said.

“If the gaming industry is not allowed to operate during the enhanced community quarantine, then Pogos should not be allowed either. No special treatment, please,” he added.

EDV