The service provider of the POGO located in the Philippines through workers/employees here, is subject to income tax and VAT on its fees charged to the nonresident POGO.
The Department of Finance (DoF) and the Office of the Solicitor General (OSG) finally came into terms on whether the Philippine offshore gaming operators (POGO) should be taxed here in the Philippines or not.
Solicitor General Jose Calida clarified in his letter to Finance Secretary Carlos Dominguez III that while foreign-based gaming operators must not be taxed, such whose operations were based in the Philippines, should be taxed.
“POGO are either Philippine-based or offshore-based companies which engage the services of PAGCOR (Philippine Amusement and Gaming Corp.)-accredited local gaming agents and service providers for their offshore gaming operations,” the letter said.
“Notably, all betting and payout system of POGO are conducted outside the Philippines. On the other hand, Philippine Service Providers are local companies that perform support services for offshore betting activities,” it added.
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Also, Calida stressed in his letter that what was issued before was a legal opinion and that there is nothing on it that “states or even infers that all POGO and their employees cannot be taxed.”
The Finance chief on the other hand, answered in affirmative with Calida, sharing the same sentiment with the tax scheme for these gaming operators.
“If the POGO (gaming operator) located outside the country caters to foreign gamblers, then it is not subject to tax in the Philippines,” Dominguez said.
“However, the service provider of the POGO located in the Philippines through workers/employees here, is subject to income tax and VAT on its fees charged to the nonresident POGO,” he added.
The Cabinet official likewise noted on the Bureau of Internal Revenue’s (BIR) statement that if the POGO is based in the Philippines and operates with a license from PAGCOR, they are subject to a 5 percent franchise tax.
Ultimately, the OSG chief expressed his support to government’s tax collection efforts on POGO.
“Nonetheless, it is the BIR which is the agency vested with the power to interpret tax laws. The OSG affirms its full support to the efforts of the BIR and DoF to tax POGO and their employees in the country,” Calida said.
“Moreover, the OSG supports the legislative efforts of Congress to streamline the efficient collection of taxes from these entities,” he added.
