DOF, Pogo firms reach deal on taxation of Chinese workers

The Department of Finance and the country’s largest Philippine offshore gaming operator (Pogo) have come to terms on tax rates to be slapped on the industry’s foreign workers, the majority of whom are Chinese nationals who help service the mainland’s massive appetite for internet-based games of chance.

Following a meeting with Finance Secretary Carlos Dominguez III, leaders of the local online gaming sector agreed on the tax landscape for the booming industry, which is estimated to employ slightly over 100,000 employees from China in call center-type operations.

As a result of this agreement, the Bureau of Internal Revenue will start levying withholding taxes from these foreign workers worth an estimated P2 billion a month starting this month.

The Finance chief said the BIR had started to collect withholding taxes from the workers.

“I asked the BIR to track down how much they are collecting and will soon see compliance,” he said earlier.

At P2 billion a month, the amount of taxes to be collected from the Pogo industry will translate to P24 billion a year—which was nonexistent before 2016, when the regulatory framework for online gaming operations was established by Philippine Amusement and Gaming Corp.

There are about 55 Pogo operators licensed by Pagcor, but fewer than 50 are in business because some licensees have been unable to raise the capital to begin their operations, according to industry sources.

Pogos are offshore gaming firms that facilitate online gaming via the internet. They use networks and software exclusively for authorized players outside the Philippines who have registered and established an online gaming accounts with the local operator.

Only players based overseas are authorized to play the online games. Strict know-your-customer rules and technology-based control mechanisms prevent foreign nationals in the Philippines and Filipinos residing abroad from participating in online gaming activities, in compliance with rules established by the regulator.

Aside from agreeing on the taxation scheme, the industry also committed to help the government weed out illegal online gaming operators.

According to a leading industry player, there are about 30 illegal Pogo operators in the country. If these are legalized, the government’s tax collections from Pogos will increase further.

Efforts are underway to also help address cultural tensions that seem to arise with the influx of Chinese workers in the country.

At least one Pogo operator is transforming a 12-hectare former resort in Cavite into a self-contained enclave with the “live, work, play” concept.

The so-called Pogo island could accommodate over 20,000 workers with full operations in five years.

Construction is ongoing with half of the 2,500 construction workers hired from the local community.