Government audits POGOs to ensure tax payment

MANILA, Philippines — The government is conducting audits to ensure that Philippine offshore gaming operators (POGOs) intending to close shop have paid their tax dues before leaving the country, the Department of Finance (DOF) said yesterday.

“Before a Philippine-registered entity can close its business, it is required to get a clearance from the BIR (Bureau of Internal Revenue). This triggers an audit where the BIR can determine if they have paid the correct taxes,” Finance Secretary Carlos Dominguez said in a text message to reporters.

During a hearing of the Senate committee on finance on the DOF’s budget, Dominguez revealed that POGOs and service providers have started canceling their lease contracts for lack of business and employees.

“I think the Chinese government is clamping down on money transfers…(it) has also started canceling the passports of those people servicing the POGO industry,” he said.

Dominguez said the exodus of POGOs will negatively impact the real estate sector and hurt the income tax and value-added tax (VAT) collections of the government.

Last June, the Philippine Amusement and Gaming Corp. (Pagcor) revealed that two POGOs sought the cancellation of their gaming licenses. Fourteen other service providers have also decided to cease operations in the country.

Pagcor said more companies are expected to shut down due to a tougher business environment amid the COVID-19 pandemic.

Jose Tria, Pagcor assistant vice president for offshore gaming licensing, said POGOs are closing down due to various factors.

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.”

According to data from Pagcor’s website, there are 55 licensed POGO operators as of Sept. 8, down from the previous figure of 60. Pagcor data also showed that 29 out of these operators have been given authority to resume their operations following the easing of lockdowns.

A total of 103 local gaming agents, service providers and special class of business process outsourcing have also been given clearance to resume operations.