POGOs should pay 5 percent franchise tax — Rep. Barbers

Published June 23, 2020, 12:00 AM

by manilabulletin_admin

By Ellson Quismorio 

Surigao del Norte 2nd district Rep. Robert Ace Barbers insisted Tuesday that Philippine Offshore Gaming Operators (POGOs) are subject to 5 percent franchise tax by the Bureau of Internal Revenue (BIR), contrary to what some of these foreign-based gaming firms are claiming.

Rep. Robert Ace Barbers (YouTube / MANILA BULLETIN)
Rep. Robert Ace Barbers

Barbers said there is no question that all Philippine Amusement and Gaming Corporation (Pagcor)-licensed POGOs, even if they have no physical office here, “are clearly subject to a 5 percent franchise tax.”

There are at least 60 Pagcor-licensed POGOs but only 10 of them are registered with the Securities and Exchange Commission (SEC) and have physical presence in the country.

“All these Pagcor-licensed POGOs, including the 10 that are registered with the SEC, are either domestic or foreign corporations registered to do business in the Philippines,” noted Barbers, chairman of the House Committee on Dangerous Drugs.

As to the foreign-based POGOs not registered with SEC, the Mindanao solon said they should also be slapped with the franchise tax because they are actually operating and doing business in the Philippines.

“These non-SEC registered POGOs cannot deny the fact 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,” he said.

Under Presidential Decree (PD) No. 1869, the Pagcor charter, the licenses granted for gaming firms to operate expressly provides for payment of 5 percent franchise fees to all its licensees.

“The law (PD 1869) provides no distinction between a domestic and a foreign or offshore corporation. Also, there is a principle in law that a tax legislation should be construed in favor of imposing the tax for the benefit of the state,” Barbers said.

“I therefore believe that there is no legal issue for the Bureau of Internal Revenue (BIR) to impose and collect franchise tax from all POGOs be it domestic or offshore,” he added.

The BIR has reported that majority of POGOs have failed to pay at least P50 billion in taxes since 2019.

OSG opinion

Assistant Secretary Antonio Lambino said the Department of Finance (DOF) maintains that POGOs, whether based locally or abroad, must pay a 5 percent franchise tax.

But the POGOs, he said, are using the Office of the Solicitor General’s legal opinion to defend their position.

Last year, 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 had earlier asked top officials of the Bureau of Immigration (BI) and the Department of Labor and Employment (DOLE) to make public the immigration status and the 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 as to the real number of Chinese nationals who entered the country as POGO workers and 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 deeply concerned about the status of the cases of a number of POGO workers caught by law enforcers for their 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,” the congressman said.