POGOs leaving PH due to spike in taxes, Pagcor admits

Photo from the Pagcor website

MANILA, Philippines — About half of Philippine offshore gaming operators (POGOs) have left the country due to higher taxes imposed by Republic Act No. 11590, the Philippine Amusement and Gaming Corp. (Pagcor) admitted to lawmakers on Tuesday.

During the hearing of the House of Representatives’ committee on appropriations about Pagcor’s revenues, Camarines Sur Second District Rep. LRay Villafuerte asked Pagcor officials about POGO tax issues.

“When the law, R.A. 11590 was passed, the media hype was the government will have higher revenues. My question is — and answer me directly: Did the revenue increase when the law was passed? Honestly now,” Villafuerte said.

“The figures show that it did not increase,” Alejandro Tengco, Pagcor chair and chief executive officer, said.

“We as legislators passed this law in the hope that the government would get more revenues.  The effects, my friends, is the POGOs left because they cannot pay the taxes that we, the government, are charging,” Villafuerte said.

From 60 to 30 operators

According to Villafuerte, he knows that even some legitimate POGO companies had left the country.

Pagcor confirmed that, from 60 licensed operators, there are just 30 right now, of which 27 remained active.

“The reason why they left is high taxes. Now the people who still want the business, have gone illegal,” Villafuerte said. “So the government was deprived of taxes. They’re still here, but from 60 to 27 remaining. Even the legitimate ones like PlayTech, it’s correct to say that PlayTech has left, right? They’re one of the biggest gaming companies in the world. They’re a legitimate company. Why did they leave?”

“I understand because of the high gaming tax of the POGO,” Juanito Sanosa Jr., Pagcor president and chief operating officer, said.

Tengco also gave the same reason.

“Let’s just say the pandemic affected it,” Villafuerte said. “But can you categorically say — we will support you — is there anything in the law that needs to be amended for us to be competitive? Why are they going to Cambodia? Why are they going to Dubai?  Why are they going illegal?” Villafuerte said.

“The reason why they are transferring is a better tax regime [abroad],” Tengco said.

Tengco vowed, however, to consult with Congress if R.A. No. 11590 would need to be amended to ensure that the sector would remain competitive.

“That’s really one of the things that we would like to give attention to. And as I said, we would like to apologize because it’s just been a week since we started the past month,” Tengco said.

“Those are the so-called leakages that we all have heard about. That’s what is said to be the high tax that’s imposed on the operators. That’s what’s being talked about. And if we come to believe that we need help from each one of you in Congress, we will return here and plead with you,” he added.

Unpaid taxes

Some minority lawmakers — particularly Rep. Arlene Brosas of the Gabriela Women’s Party and Rep. Marcelino Libanan of the 4Ps party list — noted that some POGOs have not paid taxes worth P2.328 billion, as reported by the Commission on Audit.

In response, Erica Jogno, Pagcor assistant vice president, said: “The P2.328 have already been resolved with finality. What we were talking about earlier was that these figures are not linked to our POGO licensees. These figures are actually representing illegal operations.”

“However, the P1.512 billion which remains to be uncollected are referred already to our legal group for appropriate collection and appropriate action,” she added.

POGOs have been the subject of several investigations and controversies in recent years. There was even speculation that some operations were connected to illegal activities.

In seeking to legitimize and regularize the operations of the POGOs, the 18th Congress passed R.A. No. 11590 to tax the operators.

But as early as 2021, the-Pagcor Chair Andrea Domingo admitted that a number of POGO operators had started to leave the Philippines for Cambodia, Vietnam, and Laos, where tax restrictions were less prohibitive

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