Senate passes Palace-certified bill taxing POGOs

BUT AT WHAT COST? Once enacted, the Senate-approved tax measure for POGOs and their workers is expected to raise P28.7 billion in additional revenue for the government this year and P32 billion in 2022. —INQUIRER FILE PHOTO

MANILA, Philippines — The Senate on Wednesday approved a Malacañang-certified bill that seeks to impose clear tax liabilities on Philippine offshore gaming operators (POGOs), even as some senators warned about the “serious social costs’’ of the industry that is employing mostly foreign workers.

Voting 17-3, the chamber passed on third and final reading Senate Bill No. 2232, or An Act Taxing Philippine Offshore Gaming Operations, which seeks to amend the National Internal Revenue Code to better collect taxes from POGOs.

The measure was approved on second and third readings on the same day —  skipping the three-day rule — since its passage was certified as urgent by President Rodrigo Duterte.

Under the bill, all offshore gaming licensees, regardless of whether they are Philippine or foreign-based, will be considered to be doing business in the country and will have to pay a 5-percent 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 enacted, the new law is expected to raise P28.7 billion additional revenue for the government this year and P32 billion in 2022.

Fund for Health Care Act

Sen. Pia Cayetano, who sponsored the bill as chair of the Senate ways and means committee, said the main purpose of the POGO tax measure was to create a revenue stream for the government and to ensure that POGO service providers are clearly defined and held accountable for any infraction of Philippine laws.

The tax measure indicates that the Pogo industry is here to stay, but Cayetano said: “This may be seen as something that redounds to legitimizing the industry, but the [proposed law] does not in any way prevent Congress or the executive department from initiating a move to outlaw Pogo.’’

The senator introduced a provision that will allocate 60 percent of the total revenue collected from POGOs for the implementation of the Universal Health Care Act.

She also said that while Pogos had been generating additional revenues for the government, their proliferation in recent years showed that tax collections could have been higher.

Cayetano cited data from the Bureau of Internal Revenue (BIR) showing that POGO collections amounted to P7.18 billion in 2020.

That was 11.71 percent higher than the P6.42 billion collected from the same industry in 2019, she noted.

“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 said.

The bill further requires the issuance of joint and consolidated rules and regulations for implementing and efficient sharing of information among agencies.

Some senators noted that the BIR and Philippine Amusement and Gaming Corp. (Pagcor), which grants licenses to POGOs, have differing figures.

‘No’ votes

According to the BIR, as of March 2021 there were 299 registered Pogo entities, but Pagcor’s record showed there were only 198 registered Pogos.

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

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.

‘Doesn’t create value’

“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,” Pangilinan added.

“[W]e 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,’’ he added.

Pangilinan also partly blamed the entry of Covid-19 in the country on the presence of POGO workers, citing the possibility that 31 of the 90 Chinese visitors who arrived from Wuhan, China, in February 2020 were POGO workers.

The opposition lawmaker also pointed out the national security concerns posed by the presence of POGO workers in the country, whose residences were found to have been set up near and around key military installations and who could be conducting intelligence-gathering operations for Beijing.

Hontiveros, who chairs the Senate committee on women, family and children, lamented how the government had allowed the proliferation of online gambling, mostly catering to Chinese players, when this activity was banned in mainland China.

—WITH A REPORT FROM MELVIN GASCON