MANILA, Philippines — Foreign-based Philippine offshore gaming operators (POGOs) are not exempted from paying the mandatory local franchise tax of five percent, a House leader said yesterday.
POGOs, which are licensed by the Philippine Amusement and Gaming Corp. (Pagcor), are within the state-run firm’s jurisdiction, according to Surigao del Norte Rep. Robert Ace Barbers, chair of the House committee on dangerous drugs.
“All these Pagcor-licensed POGOs, including the 10 that are registered with the Securities and Exchange Commission (SEC), are either domestic or foreign corporations registered to do business in the Philippines and there is no question that they are clearly subject to five percent franchise tax,” Barbers said.
Of the 60 or so Pagcor-licensed POGOs, 10 have so far registered with the SEC and have physical presence in the country.
As to those not registered with the SEC, Barbers said they should also be subject to the five percent franchise tax because they are operating and doing business in the Philippines.
“These non-SEC registered POGOs cannot deny that they have brought in their equipment, rented or bought office facilities and have employees working in the Philippines. Thus they cannot claim they have no physical presence here,” Barbers said.
Presidential Decree 1869 or the Pagcor charter provides that licenses granted for gaming firms to operate require payment of five percent franchise fees.
“The law provides no distinction between a domestic and a foreign or offshore corporation. Also, there is a principle in the law that a tax legislation should be construed in favor of imposing tax for the benefit of the state,” Barbers said.
“I believe that there is no legal issue for the Bureau of Internal Revenue to impose and collect franchise tax from all POGOs be they domestic or offshore,” he added.
The BIR reported that a majority of the POGOs have failed to pay at least P50 billion in taxes since 2019.
Earlier, the Department of Finance, through Assistant Secretary Antonio Lambino, said the DOF maintains that POGOs, whether based locally or abroad, must pay a five percent franchise tax.
But the POGOs, he said, are using the Office of the Solicitor General’s legal opinion to defend their position.
In 2019, Solicitor General Jose Calida said foreign-based companies in the offshore gaming sector, whose income is derived from bets outside the Philippines, are not subject to tax in the Philippines.
Barbers earlier asked the Bureau of Immigration and the Department of Labor and Employment to make public the immigration status and whereabouts or deployment of some 170,000 alleged “excess” POGO workers who entered the country since 2017.
He said the public, for a long time, had been kept in the dark on the real number of Chinese nationals who arrived to work supposedly as POGO workers that were granted visa-upon-arrival and work permits by the concerned government agencies.
“Aside from these ‘excess’ POGO workers’ whereabouts or deployment, I am also concerned on the status of the cases of a number of POGO workers caught by law enforcers for involvement in prostitution, women trafficking, drug manufacture and trafficking, drug den operation, online fraud, forging of Philippine passports, money laundering, operating illegal health clinics, among other criminal acts,” he said.