Senate starts deliberations on bill proposing tax regime for POGOs

The Senate is set to start plenary debates on the bill seeking to establish the tax regime for Philippine offshore gaming operators (POGOs).

Senate Ways and Means Committee chairperson Senator Pia Cayetano sponsors the bill seeking to establish a tax regime for POGOs. (Courtesy of the Office of Sen. Pia Cayetano)

Sen. Pia Cayetano, chairperson of the Senate Ways and Means Committee, has endorsed for plenary approval Senate Bill No. 2232, which seeks to amend the National Internal Revenue Code (NIRC). The bill is under Committee Report No. 262 signed by 14 senators.

“These online gaming facilities have become a growing industry in the Philippines, generating additional revenues for the national government in the past year,” Cayetano said in her sponsorship speech.

“It is high time that we clarify and establish the taxation regime of offshore gaming licensees, including gaming operators, gaming agents, service providers and gaming support providers, and incorporate these entities in the Philippine taxation system,” she said.

Cayetano said the proliferation of POGOs in the country in the recent years is a big potential source of revenue for the government considering that data from the Bureau of Internal Revenue (BIR) showed that POGO collections amounted to P7.18-billion in 2020.

But there is lack of explicit tax provisions pertaining to offshore gaming licensees, including gaming operators, including gaming operators, gaming agents and service providers under the NIRC, she said.

“The long-standing questions about the tax obligations of POGOs conducting business in our country remain unanswered and unaddressed, which means billions worth of revenue losses for our government,” she pointed out.

“I believe legislating the tax regime of the POGOs and incorporating the same to the NIRC is a step towards the right direction,” she stressed.

The Senate Ways and Means committee chair said passage of the bill into law would not only plug the loopholes in the country’s tax code that led to issues of confusion regarding the operation of POGOs, but would also prevent similar issues in the future which could gravely undermine the government’s power to impose and collect the right taxes.

“By addressing the gaps in our tax system, we can maximize the POGO industry’s potential as a revenue source,” she said.

“In turn, we will have more resources in our country’s coffers to fund programs that will improve people’s lives and help us build back better following this global health and economic crisis,” added Cayetano.

The bill, she said, now clarifies that all offshore gaming licensees, regardless of whether Philippine or foreign-based are considered doing business in the Phhilippines and must pay a five percent (5%) gaming tax on the gross gaming revenue or receipts derived from their gaming operations.

The bill also seeks to correct the practice of most POGO entities to withhold and remit Withholding Tax on Compensation based on Section 24 of the NIRC, or the graduated income tax rates instead of the 25 percent final withholding tax, the senator said.