Are POGOs considered BPOs? Debate rages

MANILA, Philippines — Are Pogos BPOs?

Gaming regulator Philippine Amusement and Gaming Corp. (Pagcor) and Malacañang believe so, thus allowing Philippine offshore gaming operators (Pogos) to resume operations despite the Luzon-wide lockdown.

But an IT group, the Philippine Economic Zone Authority (Peza) and a senator do not consider POGOs part of the business process outsourcing (BPO) industry.

“If POGOs are considered BPOs, then there would be no need to pay the franchise tax and the license fee,” said Senate Minority Leader Franklin Drilon.

POGOs and other entities could only engage in gambling operations if they have a license from Pagcor, according to Drilon. To get the license, POGOs must pay franchise taxes, he said.

On Monday, Pagcor explained that it was able to get a permit for POGOs to resume operations because these also provided BPO services.

Customer service

Diane Jogno, Pagcor senior offshore gaming officer, said the services component of POGOs needed to be physically present at worksites to provide customer service, support and business development functions for operators overseas.

“These are subcontracted services, meaning they are BPOs. That is why POGOs were allowed to resume partial operations,” she said at Laging Handa press briefing on Monday.

Under the modified enhanced community quarantine and general community quarantine guidelines, BPOs are considered part of essential industries and are therefore allowed to operate during lockdown.

Presidential spokesperson Harry Roque on Monday stood his ground that POGOs were BPOs.

“It’s not for them to say so because we are following a definition of POGOs in accordance with guidelines concerning the granting of tax incentives,” Roque said over GMA’s “Unang Balita,” referring to an IT group, the Peza and Drilon.

30% of work capacity

He went on: “If you are delivering a service for an activity that is not happening in our country, then that’s a BPO.”

Roque said Pogos could restart operations if they had no tax delinquencies, and could operate only at a maximum of 30 percent of their work capacity.

Rey Untal, president and CEO of the IT and Business Process Association of the Philippines (IBPAP), gave a number of reasons POGOs were not BPOs.

For one, he said, BPOs came to the country for the Filipino talent and were therefore giving direct and indirect jobs to millions of Filipinos. In contrast, POGOs largely hire foreigners.

As of 2019, the IT-BPM (business process management) industry employed 1.3 million direct workers. The figure would swell when indirect jobs that were created in related industries to support BPO operations were considered.

On the other hand, Pagcor said in March that Pogos had a total 120,976 workers, with nearly 70,000 of them Chinese, while only over 30,500 were Filipinos.

Peza Director General Charito Plaza reiterated in a statement on Monday what the BPO industry had already made loud and clear — POGOs were not BPOs.

Franchise taxes

Drilon warned that POGOs could avoid paying franchise taxes to the government because of its assertion that these were part of the BPO industry.

“To say that POGOs are part of our BPO industry is a dangerous argument. It has far-reaching implications that will put the government at a grave disadvantage,” he said in a statement on Monday.

“The POGOs can use the statement as a defense against paying the 5 percent franchise tax being imposed by the government. It will also put at risk the license fee being collected by Pagcor,” he added.

But he said POGOs were engaged in gambling and should follow the same rules for other gambling establishments.

Drilon also noted that one complaint against POGOs was that these had not been paying the proper taxes to the government. “Now it seems they want to give these incentives like those for real BPOs.”

Pagcor officer Jogno said that before POGOs and their service providers could resume operations, they must present a certificate or document from the Bureau of Internal Revenue attesting that they had no liability as of March 20.

Pagcor assistant vice president Arney Salvosa said Pogos had been proved to be good sources of revenue for government.

Last year, the government collected P11 billion in license fees and P6 billion in taxes from them, Salvosa said.