More POGOs are shutting down

MANILA, Philippines — Two Philippine offshore gaming operators (POGOs) and 14 service providers have decided to cease their operations in the country, according to the Philippine Amusement and Gaming Corp. (PAGCOR).

This is seen as the start of a string of shutdowns in the country as the gaming regulator expects more online gaming firms leaving due to a tougher business environment amid the coronavirus disease 2019 or COVID-19 pandemic.

“Two operators have officially asked for the cancellation of their offshore gaming licenses,”said Jose Tria, PAGCOR assistant vice president for offshore gaming licensing.

Tria identified these companies as SC World Development Group Ltd. and Don Tencess Asian Solutions Inc.

He said 14 other service providers have also closed down their operations, displacing 1,529 Filipino workers.

“There are others who will close down, but we have not yet received their official notices,” Tria said.

Asked why these companies have sought the cancellation of their licenses, Tria said there are many factors which influenced their decision.

These include the stringent tax regulations in the country, as well as limitations on the operational capacity as a result of movement restrictions.

Tria said other jurisdictions have also opened “with better tax rates and a friendlier environment.”

POGOs were allowed to resume partial operations last May following the relaxation of quarantine rules in some areas, provided that they pay their franchise taxes, income taxes and withholding taxes, as well as a guarantee fund of about P350 million.

However, some industry players and the Bureau of Internal Revenue (BIR) find themselves in a deadlock due to issues on POGO’s taxability.

Operators, particularly those who do not have physical offices in the country, are contesting the imposition of the five percent franchise tax on gaming revenues.

As a result, Tria said only 14 POGO firms have been able to resume their operations. These operators already acquired their clearances from the BIR.

Tria said others have the option to bring their tax issues to court.

“PAGCOR is the regulator of gaming. The issue on franchise tax is not within our jurisdiction. It’s a BIR matter. It is for the operators to question the tax before a proper venue if they do not agree with it,” he said.