The exodus of Philippine offshore gaming operations (POGOs) to affect government tax revenues from the real-estate sector and other businesses, the Department of Finance (DOF) said yesterday.
Finance Secretary Carlos G. Dominguez III said during a virtual Senate hearing yesterday that he received information about a number of office lease contracts being cancelled by offshore gaming operators.
Citing his phone conversation with a building owner in Makati City, Dominguez said that the departure of POGO foreign workers who are mostly Chinese from the Philippines is driving lease contract terminations in the property sector.
After the virtual Senate hearing, Dominguez was asked by a reporter if the POGO exodus is good or bad for the country, Dominguez responded that their departure could put a dent in government revenues.
Dominguez said that while the government’s direct tax revenues from POGOs are “not so much,” the exodus of foreign nationals will have an impact on real-estate prices and other businesses.
The finance chief explained that property companies and other businesses catering to the POGO industry will have slower revenues, which will translate to lower income tax and value-added tax (VAT) collections for the government.
Property analyst David Leechiu of Leechiu Property Consultants had warned that both office and residential businesses were at risk of losing substantial revenues should POGOs and their local service providers close shop.
According to Leechiu, POGOs had occupied 1.7 million square meters of office nationwide and two million square meters of residential space before the COVID-19 crisis.
Based on the property consultancy firm Colliers, the POGO slowdown will hurt Metro Manila real-estate industry as over one million square meters of office space, around 10 percent of leasable office space in the capital, were occupied by offshore gaming companies.
Meanwhile, Dominguez reminded POGOs that they are required to get a clearance first from the Bureau of Internal Revenue before they close shop to determine if they have paid the correct taxes.
Jose Tria, Philippine Amusement and Gaming Corp. assistant vice president for offshore gaming licensing, earlier said that POGOs were fleeing the country due to limited operations amid COVID-19 pandemic and stringent tax rules.
But Dominguez said the reason why POGO workers were fleeing the country is due to Beijing’s ongoing crackdown on cross-border gambling. “The Chinese government is clamping down on money transfers… and also started cancelling passports of those people servicing the POGO industry,” Dominguez said during the virtual Senate hearing.