Pagcor appeal: Don’t ‘overtax’ Pogos

The state-run Philippine Amusement and Gaming Corp. (Pagcor) on Friday cautioned against “overtaxing” Philippine offshore gaming operator (Pogo) firms and their foreign workers as the sector is expected be “here to stay” and generate more tax revenues for the country moving forward.

In her speech at the start of three-day Phil-Asian Gaming Expo in Pasay City, Pagcor chair Andrea Domingo said that between 2016 and 2018, Pogos already contributed P11.9 billion in gaming revenues to government coffers, up from only P56 million a year in the past.

“In the last two years, we have concentrated on making enough rules and regulations to attract those who will otherwise be declared as illegally operating to go into the fold of the law and operate legally,” Domingo said.

With the signing of the interagency joint memorandum circular (JMC) last Thursday mandating all foreign workers to secure visas, work permits and tax identification numbers (TIN) before actual employment here, Domingo said the government was able to solve the problem of collecting income taxes and corporate taxes from them.

“In this portion of the world, we were able to successfully convince about 59 operators to get into the Philippines. We have a very good model now. We do not segregate the operators from the service providers to circumvent revenue collection,” she said.

“[We’re no longer the] illegal gambling capital of the world. Now everybody is looking at the Philippines as somebody who has actually done a very good intervention in the offshore gaming sector of our industry, and are now looking into our models,” she added.

This year, the Pogo sector is expected to generate P8 billion in gaming revenues—making it a total of P20 billion in just three-and-a-half years, Domingo said.

To ensure that the Pogo industry will continue to flourish, Domingo said Pagcor would start issuing gaming employees’ licenses (GELs) “so that there would be no piracy among the different operators and players.”

The GELs will also be issued to registered firms, hence ensuring the collection of proper personal and corporate income taxes from them, Domingo added.

But the Pagcor chief later told reporters that the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) would have to ensure that Pogos paid the correct taxes while still allowing them to post handsome profits.

“I’m sure that they (the DOF and BIR) are all very intelligent, mature people that they will not overtax so that we lose whatever good it is … [Thanks to Pogos, there’s also] the real estate boom, and the boom of services like restaurants, theaters and entertainment. If you kill it (Pogos) over unreasonable steps, then you lose everything. So we have to maintain it while observing everything that is legal. We also make it a good place to invest in,” Domingo explained.

The DOF earlier lamented that Pogo workers, mostly Chinese, were not paying personal income taxes as many of them were unregistered and lacked TINs.

Starting July, the BIR will already collect at least P2 billion in taxes monthly and, will also run after unpaid back taxes.

According to Domingo, the DOF was “really not very friendly about it (the taxation issue) toward me already.”

“There’s a lot of competition from other countries like Cambodia—where you have to pay only $1,000 [to operate]. And you can put up operations in Vietnam, and I think now Laos is even thinking of opening up. There’s also, of course, I don’t know if Japan will open up to offshore gaming, but they’re already opening up to the gaming industry by issuing three licenses,” according to Domingo.

In contrast, Pogo companies have to shell out about $550,000 in licensing application fees to put up operations in the Philippines, she said.

She disclosed that three Pogos already left the country because they “were afraid of what is going to happen” with regards the taxation issues.