The Bureau of Internal Revenue (BIR) recorded a decline in tax collection from Philippine Offshore Gaming Operations (POGO) last year following their exodus at the height of the pandemic.

BIR Commissioner Caesar R. Dulay reported to the Department of Finance (DOF) that the bureau collected P3.91 billion in taxes from offshore gaming companies from January to December 2021.

Last year’s revenue haul is 45 percent lower than the P7.18 billion collection in 2020. Tax collections from POGOs stood at P2.38 billion in 2018, and P6.4 billion in 2019.

In 2020, several licenses of POGO companies were either cancelled or suspended, while their service providers had requested cancellation of their accreditation owing to strict quarantine and uncertain tax rules in 2020.

Covid-19 restrictions on operational capacities, inability of foreign workers to return to the Philippines, and new tax policies, were among the reasons for the spate of POGO closures.

Last September, President Duterte signed Republic Act 11590, which set up a tax regime for POGO.

RA 11590 imposes five percent gaming tax on services rendered by offshore gaming licensees while foreigners working in POGOs are required to pay a final withholding tax of 25 percent on their gross income.

To date, there were 40 POGO licensees and 168 POGO service providers registered with the tax bureau.

In February, 18 POGO licensees of the Cagayan Export Economic Zone Authority, including their support service providers, were temporarily closed during enforcement operations by the BIR.

After shuttering several POGOs in Cagayan, the BIR reminded non-compliant online gaming licensees and their service providers to register and pay taxes or face closure.

Dulay said these closure operations against unregistered POGO entities, along with other tax enforcement activities, should serve as a deterrent for those who would commit tax violations.

“We urge all taxpayers to comply with the Bureau's registration requirement, filing and payment of taxes, and other tax obligations in order to avoid facing business closure, penalties and possible criminal charges before the court,” Dulay said.

Earlier, the agency reported that the newly enacted tax law generated P1.22 billion in additional revenue during its initial months of implementation. The number could be higher if not for the unscrupulous non-registered or non-compliant operators.

“Despite the pandemic, from October 9, 2021 to December 31, 2021, the BIR has collected a total of P1.22 billion from Offshore Gaming Licensees, their Service Providers, and their employees,” the bureau said.

The figure is broken down as follows: P709.39 million in withholding taxes between October 9 and December 31, 2021; P409.93 million from POGOs’ gaming revenues; P89.67 million from income taxes; P5.33 million in value added tax (VAT) or percentage tax; P4.96 million in other taxes; and P3.34 million in documentary stamps tax.

“As we already have rules and regulations in place for the POGO industry, we expect POGO operations to continue and we foresee an increase in revenues arising from said activities,” the BIR said.