POGO taxes to fund government action vs COVID-19

MANILA, Philippines — Taxes collected from offshore gaming licensees will be used to fund government measures to address the coronavirus disease 2019 (COVID-19) pandemic in the next two years, according to the Bureau of Internal Revenue (BIR).

Finance Secretary Carlos Dominguez and Internal Revenue Commissioner Caesar Dulay issued last Friday BIR Revenue Regulations 30-2020, which implements Section 11(f) and (g) of the Bayanihan to Recover as One act.

These provisions enumerated the various sources of funding for COVID-19 response, which included the taxes derived from gaming operations and from non-gaming operations of offshore gaming licensees.

In particular, RR 30-2020 stated that the five percent franchise tax imposed on the gross bets or turn-overs, or the agreed pre-determined minimum monthly revenues from gaming operations, whichever is higher, earned by offshore gaming licensees, including gaming operators, gaming agents, service providers and support providers will go to the government’s COVID-19 response efforts.

Income taxes, value-added tax and other applicable taxes imposed on the income from the non-gaming operations of these entities are likewise covered.

After two years or upon a determination that the threat of COVID-19 has been successfully contained or abated, whichever comes first, these tax revenues will be accrued back to the general fund of the government, the RR said.

To ensure the proper implementation of the new regulations, the BIR directed the Philippine Amusement and Gaming Corp. (PAGCOR) and its chosen third-party auditor to furnish the agency with the relevant information, including the gross bets or turnovers earned by offshore gaming licensees.

They should also provide data on the minimum guarantee fee paid by these companies, as well as other information such as the list of licensees and accredited service providers andnumber of foreign national employed.

“Non-payment, underpayment and/or payment of taxes computed not in accordance with the prevailing official exchange rate at the time of payment by offshore gaming licensees, operators, agents, service providers and support providers shall be considered as fraudulent acts and subject to incremental penalties under Sections 248(B), 249(B), 253 and 255 of the National Internal Revenue Code (NIRC) of 1997, as amended,” the BIR said.

Offshore gaming licensees who fail to pay the taxes due or commit fraudulent acts will be served with closure orders by the BIR.

“Such erring entities shall cease to operate,” the RR stated. “The implementation of closure orders against operators, licensees or agents shall necessarily include the closure of all their respective accredited service providers, which must also cease to operate.”