Crackdown on illegal Pogo operators looms

Firms legally engaged in the booming Philippine offshore gaming operations (Pogo) will help the government crack down on fly-by-night operations that could be employing as many as 50,000 undocumented workers from China— a result of the deal sealed recently between the industry and the Department of Finance (DOF).

According to a Pogo industry source, it would be easy for authorities to stop illegal online gaming outfits after employees of firms licensed by the state-owned Philippine Amusement and Gaming Corp. (Pagcor) are made fully compliant with local tax regulations.

“Once all our legal employees receive their documents from the Bureau of Internal Revenue (BIR) and the Bureau of Immigration (BI), it will be easy to clamp down on unregistered operations because everyone without proper documents will be illegal,” said the official familiar with the Pogo-DOF agreement.

Finance Secretary Carlos Dominguez III. (File Photo by TOTO LOZANO / Presidential Photographers Division)

On Monday, Finance Secretary Carlos Dominguez III confirmed that the government and industry operator had agreed on a framework that would align the wages of more than 100,000 Chinese workers in the industry with Philippine income tax laws.

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

The amount of taxes to be collected from the Pogo industry will translate to P24 billion a year—which is nonexistent before 2016 when the regulatory framework for online gaming operations was established by the Pagcor.

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.