House OKs Pogo tax bill on final reading

MANILA, Philippines – The House of Representatives has passed on final reading a measure that seeks to impose taxes on persons involved in Philippine offshore gaming operations (Pogos).

Members of the lower chamber voted 198-13-2 to approve on third reading House Bill 5777, which amends the National Internal Revenue Code of 1997.

The taxation scheme on Pogos is projected to raise around P 45 billion in revenues for the government.

Among those who voted against the measure were the six members of the Makabayan bloc, House minority leader and Abang-Lingkod Rep. Joseph Stephen Paduano, and House Deputy Speaker and Manila 6th District Rep. Bienvenido Abante.

Abante, in his explanation of his “no” vote, remarked: “We will let the devil laugh at us if we believe that there is a devil, and we will let the Chinese flourish in our country.”

House deputy minority leader and Bayan Muna Rep. Carlos Isagani Zarate warned that Pogos were created as a “legal loophole” for countries where gambling is forbidden.

“We oppose the government’s plan to accept illegal gambling from other countries which have been linked to criminal activities. With Pogos, cases of prostitution, illegal drugs and illegal entry of foreign workers also rose,” he said.

For his part, Paduano noted that Pogos pay a five percent franchise tax to the Philippine Amusement and Gaming Corporation (Pagcor) in lieu of any other local or national tax.

“I have decided to vote no for the reason that the substituted bill was not the one debated upon during the period of interpellation. Significant changes have been incorporated in the bill which [was] not discussed during the period of debates,” he said.

He added that special economic zones with their own charter-like Aurora, Zamboanga and Cagayan, already have a tax provision in their charters and “should have been excluded from the coverage” of the bill.

The bill seeks to impose a 25 percent withholding tax on the gross income of alien employees of Pogos in the country, assuming a minimum gross annual income of P 600,000.

State insurance firms such as the Philippine Health Insurance Corporation, Social Security System, and Home Development Mutual Fund may use this as the basis for computing applicable contributions to be collected from alien Pogo workers.

Meanwhile, accredited service providers to Pogos will not be subject to gaming tax but will pay income tax and other applicable local and national taxes.

Pogos will be imposed a gaming tax equivalent to five percent of receipts’ gross revenue derived from gaming operations and similar related activities.

This is lieu of all kinds of taxes, including franchise taxes, levies, fees, etc. that may be imposed by the Philippine Amusement and Gaming Corporation and special economic zones.

Pagcor special economic zones may impose regulatory fees on offshore gaming licenses that will not exceed two percent of Pogos’ gross revenue, or a pre-determined minimum guaranteed fee, whichever is higher.

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