Senate OKs Pogo tax bill

The gaming tax bill aims to apply to all offshore gaming licensees, regardless of where they are headquartered.

MANILA, Philippines — The Senate on Wednesday approved on third and final reading a bill clarifying the tax liabilities of Philippine offshore gaming operators (Pogos).

Voting 17-3-0, the chamber passed Senate Bill No. 2232 or An Act Taxing Philippine Offshore Gaming Operations, which seeks to amend the National Internal Revenue Code (NIRC) to collect taxes from Pogos better.

The bill was approved on second reading on Wednesday after a lengthy period of amendments. The Senate was able to pass the measure on final reading the same day — skipping the three-day rule — since its passage was certified as urgent by President Rodrigo Duterte.

READ: Duterte certifies Pogo tax regime bill as urgent

Under the bill, all offshore gaming licensees, regardless of whether Philippine or foreign-based will be considered doing business in the Philippines and will have to pay a 5-percent gaming tax on the gross gaming revenue or receipts derived from their gaming operations.

Foreigners employed by offshore gaming licensees and service providers will be subjected to a 25-percent withholding tax.

The measure provides a minimum final withholding tax due of P12,500 for any taxable month.

Once the bill is enacted into law, collections from Pogos are projected at P28.7 billion in 2021 and P32 billion the next year.

READ: P28.7B projected to be collected from Pogos in 2021 under tax regime bill

60% of collections for UHC

During the period of amendments, Sen. Pia Cayetano, sponsor of the bill as chairperson of the Senate ways and means committee, introduced a provision that will allocate 60 percent of the total revenue collected from Pogos for the implementation of the Universal Healthcare Act.

Twenty percent will be allocated to the Department of Health’s facilities enhancement programs while the other 20 percent will be used for the “attainment” of the Sustainable Development Goals as determined by the National Economic and Development Authority.

While Pogos have become a growing industry in the country and have been generating additional revenues for the government, their proliferation in recent years shows that tax collections could have been higher, according to Cayetano.

She cited data from the BIR showing that Pogo collections amounted to P7.18 billion in 2020.

This, Cayetano added, is 11.71 percent higher than the P6.42 billion collected from the same industry in 2019.

“It was estimated that the government could have collected more than P38 billion in 2019 alone, a far cry from the actual collection of the BIR,” she, however, pointed out.

The bill further requires the issuance of joint and consolidated rules and regulations for implementing and efficient sharing of information among agencies. Some senators note that BIR and Pagcor have differing Pogo figures.

According to the BIR, as of March 2021, there were 299 Pogo entities were registered with it, while Pagcor’s record says that only 198 Pogo entities were registered with them.

Pogo entities include Philippine and foreign-based offshore gaming operators, local gaming agents, and service providers.

‘No’ votes

Senate Minority Leader Franklin Drilon and Senators Risa Hontiveros and Francis Pangilinan voted against the bill.

In explaining his “no” vote, Pangilinan cited “serious social costs” caused by the rise of the Pogo industry in the country.

“Property rental prices surged by as much as 62 percent in 2018. Filipinos have been kicked out of their condo units and homes that they were renting because POGO workers can afford to pay more,” he said.

“Foreign Pogo workers were also heavily involved in various criminal activities such as the bribery of immigration officials, prostitution, money laundering, human trafficking, tax evasion, online fraud, and even kidnapping and murder,” he added.

While Pangilinan recognized the additional revenues that may be collected from Pogos, he said the P28.7 billion projected for 2021 may be “on the low side.”

“Whatever amount the BIR collects from Pogos may be used to fund projects to give relief to our people’s suffering during this pandemic,” the senator said.

“However, we cannot and should not turn a blind eye away from the social costs that the Pogo industry brings and has brought upon us — social costs that may be difficult to reverse. Instead of allowing Pogos to thrive, perhaps we ought to have re-allocated funds from other sources to support our pandemic relief efforts,” he added.

abc / atm