Senate OKs on third reading bill imposing additional taxes on POGO

Published June 3, 2021, 9:31 AM

by Hannah Torregoza 

The measure seeking to impose additional taxes on Philippine Offshore Gaming Operators or POGOs and their service providers is now waiting for President Duterte’s signature.

This was after the Senate voted 17-3-0, and then approved on third and final reading, Senate Bill No. 2232 which seeks to establish a tax regime that covers Chinese-owned POGOs on Wednesday night.

The Senate passed the measure on second and third reading on the same day skipping the 3-day rule since it has been certified as urgent by President Duterte.The House of Representatives passed its own version of the bill in February of this year. Both houses of Congress will convene to tackle the disagreeing provisions of the measure in a bicameral conference committee before submitting the final copy of the bill to the President.

The bill seeks to slap a 25 percent withholding tax on the gross income of foreign individuals employed by POGOs and their service providers, and provides a minimum final withholding tax due of not less than P12,500 for any taxable month from the individual.

This move is seen to address the pervasive misdeclaration on the actual monthly salary of foreign nationals working in the POGO industry.

The measure also identifies that all offshore gaming licensees, regardless of whether Philippine or foreign-based are considered doing business in the Philippines and must pay the five (5) percent gaming tax on derived from their gaming operations.

Senator Pia Cayetano, chair of the Senate Ways and Means Committee and sponsor of the bill, had stressed the necessity of clarifying and establishing a taxation regime for offshore gaming licensees, including gaming operators, gaming agents, service providers and gaming support providers and incorporate these into the country’s taxation system as this would help boost the government’s revenue collection now badly needed to help the economy recover from the negative impact of the COVID-19 pandemic.

“If we are to combine the five percent gaming tax on the POGOs and the 25 percent withholding tax on the employees, for 2021, it’s a P28.7-billion projection,” Cayetano said during the plenary debates on the bill.

“And for 2022, it’s (going to be) P32-billion,” the senator stressed.

Senate Minority Leader Franklin Drilon, Senators Francis Pangilinan and Hontiveros were the three lawmakers who voted “no” to the bill.

Pangilinan said that the entry of POGOs in the country’s business industry came with “serious social costs” and should not be allowed to thrive.

Pangilinan said that while the amount that the Bureau of Internal Revenue (BIR) may collect from POGOs may be used to fund projects to give relief to our people suffering during this pandemic, the country “shouldn’t turn a blind eye from the social costs that the POGO industry brings in” to the Philippines.

Aside from the rise in criminal activities such as kidnapping, extortion and money laundering, Pangilinan pointed out POGOs contributed to the surge in property rental prices by as much as 62 percent, while Filipinos have been kicked out of their own condo units and homes that they were renting due to the POGO workers ability to pay more.

“(It) has brought upon us, social costs that may be difficult to reverse,” said Pangilinan as he explained his no vote.

“Instead of allowing POGOs to thrive, perhaps we ought to have reallocated funds from other resources to support our pandemic relief efforts,” he stressed.

Drilon also pointed out that tax leakages are a major problem in regulating the online gambling industry, targeted at the Chinese-speaking market. Hontiveros, for her part, believes that online gambling is not the kind of foreign direct investments (FDI) the Philippines should be entertaining.