OSG clarifies it did not say POGOs can’t be taxed

Published November 20, 2019, 9:19 AM

by Gabriela Baron & Minka Klaudia Tiangco

By Jeffrey Damicog

The Office of the Solicitor General (OSG) clarified that it did not say that Philippine Offshore Gaming Operators (POGO) cannot be taxed.

Office of the Solicitor General (MANILA BULLETIN)
Office of the Solicitor General (MANILA BULLETIN)

The OSG made the clarification in response to criticisms against it following a newspaper report which cited the OSG’s legal opinion to the Philippine Amusement and Gaming Corporation (PAGCOR) and the Bureau of Internal Revenue (BIR).

“In any case, there is nothing in the legal opinion that states or even infers that all POGOs and their employees cannot be taxed,” the OSG said in a statement.

The OSG stressed the legal opinion should have been “read and understood first in its entirety to prevent any misinterpretation.”

“Nonetheless, it is the BIR which is the agency vested with the power to interpret tax laws. The OSG affirms its full support to the efforts of the BIR and DOF (Department of Finance) to tax POGOs and their employees in the country. Moreover, the OSG supports the legislative efforts of Congress to streamline the efficient collection of taxes from these entities,” the OSG declared.

The OSG explained POGOs are either Philippine-based or offshore-based companies and engage the services of PAGCOR-accredited Philippine service providers.

With this, the OSG pointed that, in its legal opinion, “the POGOs we referred to as not subject to income tax are the foreign-based POGOs.”

“Ultimately, a foreign-based POGO’s source of income is the placement of bets on its online betting facility – which are all derived from sources outside the Philippines,” it said.

Citing Section 23 (F), Chapter II of the National Internal Revenue Code (NIRC), the OSG explained that “a foreign corporation, whether engaged or not in trade or business in the Philippines, is taxable only on income derived from sources within the Philippines.”

“Finally, it bears stressing that Philippine Service Providers and Local-based POGOs are subject to Philippine taxes on income derived from sources within and without the Philippines,” the OSG said

The OSG also said that POGOs should not be confused with Philippine service providers.

“These Philippine service providers are the companies that employ foreigners here in the Philippines, handle the recording and live streaming of such games, and perform IT support services. These companies then sell these live-streamed games to foreign-based POGOs. In turn, the foreign-based POGOs collect bets from its pre-registered clients through its online platform and earn from such activity,” it explained.

The OSG defended its decision to issue the legal opinion which was sought by the PAGCOR and BIR.

“We explain that in rendering the legal opinion, the OSG is performing its mandate under the Administrative Code as the statutory counsel of government and all its departments, bureaus, agencies, and instrumentalities. Thus, when requested by our client agencies for legal opinion on matters requiring clarification, we are bound under the law to perform our mandate,” it said.

 
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OSG clarifies it did not say POGOs can’t be taxed

Published November 20, 2019, 12:00 AM

by manilabulletin_admin

By Jeffrey Damicog

The Office of the Solicitor General (OSG) clarified that it did not say that Philippine Offshore Gaming Operators (POGO) cannot be taxed.

Office of the Solicitor General (MANILA BULLETIN)
Office of the Solicitor General (MANILA BULLETIN)

The OSG made the clarification in response to criticisms against it following a newspaper report which cited the OSG’s legal opinion to the Philippine Amusement and Gaming Corporation (PAGCOR) and the Bureau of Internal Revenue (BIR).

“In any case, there is nothing in the legal opinion that states or even infers that all POGOs and their employees cannot be taxed,” the OSG said in a statement.

The OSG stressed the legal opinion should have been “read and understood first in its entirety to prevent any misinterpretation.”

“Nonetheless, it is the BIR which is the agency vested with the power to interpret tax laws. The OSG affirms its full support to the efforts of the BIR and DOF (Department of Finance) to tax POGOs and their employees in the country. Moreover, the OSG supports the legislative efforts of Congress to streamline the efficient collection of taxes from these entities,” the OSG declared.

The OSG explained POGOs are either Philippine-based or offshore-based companies and engage the services of PAGCOR-accredited Philippine service providers.

With this, the OSG pointed that, in its legal opinion, “the POGOs we referred to as not subject to income tax are the foreign-based POGOs.”

“Ultimately, a foreign-based POGO’s source of income is the placement of bets on its online betting facility – which are all derived from sources outside the Philippines,” it said.

Citing Section 23 (F), Chapter II of the National Internal Revenue Code (NIRC), the OSG explained that “a foreign corporation, whether engaged or not in trade or business in the Philippines, is taxable only on income derived from sources within the Philippines.”

“Finally, it bears stressing that Philippine Service Providers and Local-based POGOs are subject to Philippine taxes on income derived from sources within and without the Philippines,” the OSG said

The OSG also said that POGOs should not be confused with Philippine service providers.

“These Philippine service providers are the companies that employ foreigners here in the Philippines, handle the recording and live streaming of such games, and perform IT support services. These companies then sell these live-streamed games to foreign-based POGOs. In turn, the foreign-based POGOs collect bets from its pre-registered clients through its online platform and earn from such activity,” it explained.

The OSG defended its decision to issue the legal opinion which was sought by the PAGCOR and BIR.

“We explain that in rendering the legal opinion, the OSG is performing its mandate under the Administrative Code as the statutory counsel of government and all its departments, bureaus, agencies, and instrumentalities. Thus, when requested by our client agencies for legal opinion on matters requiring clarification, we are bound under the law to perform our mandate,” it said.

 
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