Pogos must pay 2019 tax dues to reopen during lockdown – DOF

Philippine offshore gaming operators (Pogos) must first pay all their tax dues before they can resume operations during the lockdown, Finance Secretary Carlos Dominguez III said on Friday.

Licensed Pogos must pay their franchise tax to the state-run regulator Philippine Amusement and Gaming Corp. (Pagcor), and their income and other taxes to the Bureau of Internal Revenue (BIR).

“In order for Pogo service providers to be allowed to operate, they must pay their 2019 income tax liabilities—in the case of Pogo franchisees, the franchise tax of 2019,” Dominguez said, adding:

“Both service providers and licensees must also remit to the BIR all current 2020 withholding tax liabilities. They must also execute an undertaking to pay the BIR all their arrears. Once these are complied with, the BIR will issue a tax clearance to enable them to operate.”

The BIR has thrice pushed back the deadline for filing and paying 2019 income tax returns (ITRs) after the initial monthlong enhanced community quarantine imposed on March 15 in Luzon and other parts of the country was extended twice—the latest until mid-May in areas with a high prevalence of the new coronavirus disease (COVID-19).

But BIR Deputy Commissioner Arnel Guballa told the Inquirer on Friday that “Pogos should pay their annual ITRs now” if they wanted to reopen.

Tax arrears

Pogos have been shuttered since March in line with the COVID-19 lockdown.

On May 1, presidential spokesperson Harry Roque told reporters of the impending reopening of Pogos. Speaking on TV the next day Pagcor Chair Andrea Domingo said Pogos could reopen after meeting “very strict requirements.”

Domingo said the suspension of Pogo operations had deprived the Philippine government of P600 million in monthly earnings. She said the revenue from online gambling would help fund the government’s fight against the COVID-19 pandemic.

But netizens and certain lawmakers balked at the planned reopening of the Pogos, pointing out that a big number of them had billions of pesos in tax arrears, and that they provided nonessential services and would pose health risks.

As of early this year, Pagcor had issued licenses to operate to about 60 Pogos, and the BIR had registered 218 service providers employing over 108,000 foreigners.

Pogo licensees tap service providers to communicate with their clients—online gamblers mostly in China.

The Philippine government has been going after Pogos that did not remit their mostly Chinese workers’ withholding income taxes and did not pay corporate and franchise taxes. It had wanted to collect from Pogos P2 billion in taxes per month. Last year, the government collected P6.42 billion in additional personal and corporate income taxes from tax-deficient Pogos.

‘Nogo’

Both Roque and Domingo described Pogos as business process outsourcing companies.

In a statement issued on Friday, Pagcor denounced all forms of illegal gambling and said it had intensified its crackdown on “nonregistered offshore gaming operators, or Nogo,” as early as March.

Pagcor said it would continue to cooperate with the task force against illegal Pogos, which includes law enforcement agencies, such as the Philippine National Police, National Bureau of Investigation and Department of Justice.

“Because of the limitations of its charter, Pagcor has no police powers. Hence, it could not arrest or prosecute illegal gambling operations. What it can do within the bounds of its charter is to regulate gaming entities, and ensure that revenues from such operations will be used for the benefit of the country,” the gaming regulator said.

Last Wednesday, Metro Manila police uncovered an illegal online gambling operation in a Makati City condominium.

Top priority

In another statement, the Accredited Service Providers of Pagcor (Aspap) said it would observe “all protocols established under the ECQ (enhanced community quarantine)” as “the safety of everyone is a top priority.”

“We wish to reassure our legislators and the public that the resumption of Pogo operations would not undermine the ECQ or pose unnecessary health risk to the community. Aside from stringent health and safety protocols imposed as prerequisite to reopening, only 30 percent of the workforce, mostly Filipinos, who must test negative for COVID-19, are allowed to return to work,” Aspap spokesperson Margarita Gutierrez said.

Gutierrez claimed that “so far, no cases of COVID-19 have been attributed to the Pogo industry.”

“We wish to underscore that our operations shall be an important component in the country’s road to recovery from the devastating effects of the pandemic. Moving forward, we can only hope that a smoother cooperation between the private and public enterprises shall take precedence over any misimpression or miscalculation,” she said.

According to Gutierrez, Aspap “welcomes” the formal inquiry planned by Senators Francis Pangilinan and Risa Hontiveros on the resumption of Pogo operations. She said it would be “an opportunity to clear the concerns raised and clarify any disinformation.” —WITH A REPORT FROM NIKKA G. VALENZUELA