More and more Philippine offshore gaming operators (Pogos) have been paying their correct tax obligations with the Bureau of Internal Revenue (BIR), such that income taxes from this sector reached P1.63 billion as of August.
BIR Deputy Commissioner Arnel Guballa told reporters last week that an additional P230 million in income taxes were collected last August as the country’s biggest tax-collection agency intensified its drive against Pogos that evade their tax dues.
In particular, the temporary closure last month of Pogo service provider Great Empire Gaming and Amusement Corp. (Gegac), which had deficiencies in value-added tax (VAT) payments, created a chilling effect, Guballa said.
Gegac was shot down because it had been registered at the Subic Bay Freeport Zone—hence supposed to enjoy preferential tax treatment—but had put up the bulk of its operations in Quezon City, where it did not have any tax break.
The first Pogo service operator closed down under the BIR’s “Oplan Kandado” program, Gegac had another site in Parañaque City. It employed over 8,000 workers across its three locations.
Gegac was later on allowed by the BIR to resume operations after it paid an initial P250 million of its tax liabilities totaling P1.3 billion.
Gegac had committed to pay the balance through post-dated checks in the last three months of this year.
Internal Revenue Commissioner Ceasar R. Dulay said last week the company had settled its obligations as it “cannot afford to be closed for long.”
Guballa said the BIR was monitoring corporate income tax payments from 218 Pogo service providers on top of the personal income taxes that these companies remit for their 108,914 foreign—mostly Chinese—workers.
While he had yet to disclose the September collection figures, Guballa said the “fear” among operators after Gegac’s closure was likely to sustain the increase in remittances posted these past few months.
Guballa said that after Gegac was shuttered, a number of other Pogo service providers contacted the BIR to settle their tax obligations.
“Our (the BIR’s) collection is improving because they (Pogos) know that we’re doing enforcement activities. Our dialogue with them had lapsed; we sent them notices but they were not complying, so we did the raid [of Gegac],” he said.
The BIR was enforcing Finance Secretary Carlos G. Dominguez III’s order to collect taxes from Pogos.
As for the previous lag in issuance of tax identification numbers to foreign Pogo workers, Guballa said the BIR was already catching up in producing the IDs.