Bayanihan 2 tightens rules on POGOs to prevent fraud — Drilon

Published August 21, 2020, 1:13 PM

by Hannah Torregoza 

Senate minority leader Franklin Drilon on Friday said the proposed Bayanihan to Recover as One Act or Bayanihan 2 has tightened the rules on Philippine Offshore Gaming Operators (POGO) to prevent fraudulent activities happening in this sector and, at the same time, increase government tax collection.

Senator Franklin Drilon (Senate of the Philippines / MANILA BULLETIN FILE PHOTO)

Drilon said the Bayanihan 2 bill, which the Senate ratified on Thursday night, identifies POGO earnings as a source of revenue for the government’s COVID-19 stimulus program and includes provisions that orders the Bureau of Internal Revenue (BIR) to shut down POGOs that will fail to pay their taxes.

“Alam natin na dinadaya yung exchange rate kaya ang ginawa natin ay yung official exchange rate at the time of payment ang gagamitin at kapag sila ay nandaya ay pwede silang ipasara at kasuhan (We know that the government is duped using the exchange rate that’s why we will use the official exchange rate at the time of payment and if they cheat, they can be charged and their business will be closed down),” Drilon said in a DZMM Teleradyo interview.

Under the Bayanihan 2, the tax shall be computed on the peso equivalent of the foreign currency used, based on the prevailing official exchange rate at the time of payment.

Drilon, who proposed such provisions, noted how companies use foreign exchange to under-declare their income. The senator said POGO licensees and operators reportedly owed the government P50-billion in unpaid taxes.

Under the measure, failure to follow the provision will be considered as a fraudulent act constituting under-declaration of taxable receipts or income, and shall be subject to interests, fines, and penalties under the National Internal Revenue Code of the Philippines.

The bill also strictly mandates that the five percent franchise tax shall be on the gross bets or turnovers or the predetermined minimum monthly revenues from gaming operations, whichever is higher, earned by offshore gaming licensees, including gaming operators, gaming agents, service providers, and gaming support providers.

The lawmaker assured that all proceeds from this 5-percent franchise tax shall be used for COVID-19 measures and address any funding gap.

“Our current fiscal situation is insufficient. We need additional sources of funds to respond to the pandemic. POGO is a good source of revenue if we plug the loopholes in the system,” the senator said.

“I am glad that with our amendments, the government can collect the right amount of taxes from POGOs,” he added.