Pagcor warns against overtaxing POGOs

MANILA, Philippines — The Philippine Amusement and Gaming Corp. (PAGCOR) has cautioned lawmakers against overtaxing the offshore gaming industry, saying this may severely impact legitimate businesses and give rise to illegal operators in the country.

PAGCOR chairman and chief executive officer Andrea Domingo issued the statement following the House of Representatives’ move to pass at the committee level House Bill 5267, which sets the tax liabilities of Philippine offshore gaming operators (POGO).

The bill, in particular, seeks to slap offshore gaming operators a five percent franchise tax and 25 percent withholding tax for foreign workers earning at least P600,000 annually.

“Fair and reasonable taxation is good. Overtaxation will, of course, kill the legal and legitimate business operations. For illegal operations, it will not matter,” Domingo said.

“PAGCOR’s charter does not give it jurisdiction over illegal gambling so the task of fighting illegal gambling falls on the law enforcement agencies,” she said.

Considering the risks of overtaxation, Domingo hopes Congress would allow the POGO industry some breathing space to grow and mature before being subjected heavily to taxes. 

Domingo said PAGCOR hopes that Congress would discuss the bill further, considering it sets a tax rate only for foreign employees in the POGO industry, and not the other sectors.

“I think the bill will be up for debate and discussion in plenary soon enough. The legal minds and the constitutionalists in Congress will surely debate on this matter. Then we will see how they will resolve these issues,” Domingo said.

There are currently 60 POGO firms that are licensed by PAGCOR. However, the regulator earlier imposed a moratorium on new POGO licenses until such time that issues plaguing the industry are addressed.

The Bureau of Internal Revenue (BIR) is also monitoring 218 POGO service providers in the country. Moreover, foreign workers in the industry are currently estimated at around 138,000.

Earlier, Solicitor General Jose Calida said the government cannot impose taxes on POGOs based on the “source of income” principle under the country’s tax code.

However, Finance Secretary Carlos Dominguez rebuffed this, saying POGOs are subject to taxes, in accordance with existing laws.

Latest data showed withholding tax collections from the POGO industry amounted to P1.63 billion from January to August.

Domingo, for her part,said the Office of the Solicitor General’s opinion would prevail in the absence of any clear law covering the taxability of the income of offshore gaming operators.

“But of course, if Congress passes a law clearly providing for the tax accountabilities of offshore gaming operators, then we should abide by it as it is the law,” Domingo said.