Bill taxes POGO operators, workers

Lambino explained that it is high time to tax operators of POGO. #Pogotax

The bill proposes a 5 percent on all offshore gaming companies on gross receipts derived from gaming operations

The House Committee on Ways and Means has approved a bill taxing operators and workers of Philippine Offshore Gaming Operations (POGO).

House Bill 5267 seeks to amend Sections 22, 25 and 119 of the National Internal Revenue Code of 1997, as amended.

In the proposed amendment, Section 22 provides for the definition of Offshore Gaming Licensee (OGL), which shall refer to an offshore gaming operator duly licensed and authorized to provide offshore gaming services.

This OGL may either be (1) Philippine-based operator, a duly constituted business enterprise organized in the Philippines, or (2) offshore-based operator, a duly constituted business enterprise organized in any foreign country that will engage the services of the Philippine Amusement Gaming Corporation (PAGCOR)-accredited service provider or support provider or any special economic zone authority and tourism authorities. Moreover, an OGL shall be considered engaged in doing business in the Philippines.

Meanwhile, the amendment to Section 25 provides that an alien individual who is a permanent resident of a foreign country and is employed and assigned in the Philippines by an OGL shall pay a tax of 25 percent of the salaries, wages, annuities, compensation, remuneration and other emoluments, such as honoraria and allowances received from such licensee.

The amendment to Section 119, which is titled “Tax on Franchise”, provides that there shall be a tax of 5 percent on all offshore gaming companies on gross receipts derived from gaming operations covered by the law granting the franchise.

During the hearing, Cagayan Economic Zone Authority (CEZA) Administrator and Chief Executive Officer Atty. Raul Lambino expressed support for the bill.

“We are fully supportive of the bill to tax the offshore gaming operators in the Philippines,” he said.

Lambino explained that it is high time to tax operators of POGO because there is no clear distinction as to whether they are actually operating in the Philippines or they’re operating outside the country.

“The notion is that since the betting and the payment are happening outside the Philippines, then they are beyond the taxing jurisdiction of the Philippines. But our position in CEZA is that they are actually doing business in the Philippines through their service providers so they have to be taxed of the income that they are getting,” he added.

PAGCOR Policy Development Senior Manager Jessa Mariz Fernandez also expressed support for the bill. She admitted upon the query of the Committee’s Senior Vice Chairperson Estrellita Suansing (1st District, Nueva Ecija) that PAGCOR is currently collecting 2 percent of the gross gaming revenue (GGR) of the licensees.

Fernandez said that PAGCOR supports the 5 percent franchise tax proposed in the bill. She sought clarification whether the 5 percent franchise tax would be an additional tax on top of the current 2 percent tax on GGR.

Ways and Means chaired by Rep. Joey Sarte Salceda (2nd District, Albay) explained that there is a regulatory regime of change to 5 percent, telling PAGCOR that “collector na kayo ng 5 percent of franchise. Essentially that is what the bill is all about”.