Dominguez confirms POGO deal: Over 100,000 Chinese employees to pay income tax

Finance Secretary Carlos Dominguez III. (Presidential Photographers Division)

MANILA, Philippines–The head of the Duterte administration’s economic team and the largest online gaming operator in the country have agreed on a framework that will align the wages of over 100,000 Chinese workers in the industry with Philippine income tax laws.

The deal — confirmed by Finance Secretary Carlos Dominguez III — brings to an end the standoff between the government and the Philippine offshore gaming operators (POGO) that had threatened to derail the booming industry.

“We met twice with the biggest POGO operator and told him that he and the rest of the operators have to comply with the provisions of the law,” the Finance chief said, adding that local regulations call for a tax levy on the “income earned by all their employees, whether foreigners or Filipinos.”

Dominguez said employees of the 55 firms licensed by authorities must also comply with regulations on membership dues to the Social Security System and Home Development Mutual Fund or Pag-IBIG.

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 is already starting to collect the withholding taxes from the workers and this is expected to boost state coffers.

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

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 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 government weed out illegal online gaming operators.

According to a leading industry player, there are roughly 30 illegal POGO operators in the country. If these are legalized, government’s tax collections from POGOs can increase further.