SC suspends 5 percent POGO taxes under Bayanihan 2

FILE — Chinese nationals working on a Philippine Offshore Gaming Operators have their temperature check as precautionary measure against the spread of COVID-19 before entering the office building at Pearl Plaza mall in Barangay Tambo, Paranaque City. INQUIRER PHOTO / RICHARD A. REYES

MANILA, Philippines–The Supreme Court has issued a temporary restraining order against the collection of a five percent franchise tax on Philippine offshore gaming operators that was supposed to provide additional funding to fight COVID-19.

A court insider said 13 justices have voted for the granting of the restraining order preventing the government’s revenue agencies from enforcing Section 11 of the Bayanihan 2, revenue circulars from the Bureau of Internal Revenue.

Only Associate Justice Marvic Leonen dissented.

The Supreme Court’s Public Information Office has yet to issue an official statement.

Lawmakers pushed for the imposition of a five percent franchise tax to increase the revenue collections by over P15-billion.

Petitioners, 14 foreign-based POGOs with an offshore gaming license from the Philippine Amusement and Gaming Corporation (PAGCOR) said Section 11 (f) and (g) of the Bayanihan 2 Law “imposes new taxes (in the guise of merely listing sources of funding) and are, therefore, an aberration because the entire law does not create or refer to the imposition of any new tax.”

The majority of the justices believed that the portion of the law is a “rider provision.”

The Supreme Court, in previous rulings, said a “rider” violates the constitutional provision requiring that a bill, which may be enacted into law, cannot embrace more than one subject, which shall be expressed in its title.

But Justice Leonen, in his dissent, said “the title and the statement of the policy included the raising of funds as among the purposes of the law and to grant the presumption of constitutionality to an urgent piece of legislation passed by Congress and signed by the President.”

Bayanihan 2 was enacted to provide more assistance to the pandemic hit public and prepare the country for economic recovery. It expired last Dec. 19.

CFC