MANILA, Philippines — The head of the Duterte administration’s economic team warned on Wednesday that the government would come down hard on tax-evading Philippine offshore gaming operators (Pogos) as revenue officials temporarily shuttered the unregistered branches of the country’s biggest Pogo service provider.
Since the crackdown on the illegal offshore gambling operators began in September, the Bureau of Internal Revenue (BIR) had closed down three Pogo service providers and collected at least P1.2 billion in corporate taxes before these were allowed to resume operation, Finance Secretary Carlos Dominguez III said in a statement.
“Basically we’re going hard against people who are evading taxes,” Dominguez said. “It is unfair to Filipino taxpayers dutifully paying their taxes for these Pogos to continue with their tax-dodging practices.”
On top of corporate income taxes, the BIR also collected P1.63 billion in withholding taxes from Pogo service providers that had not been remitted as of August.
The withholding taxes collected so far this year are much bigger than the P579 million recorded in 2018 and P175 million in 2017.
6,700 foreigners employed
On Wednesday, BIR Deputy Commissioner Arnel Guballa and Assistant Finance Secretary Tony Lambino closed down the offices of New Oriental Club88 Corp. (NOCC) in Parañaque City.
According to Guballa, NOCC is the biggest Pogo service provider in the country with a total of 6,700 foreign —mostly Chinese — workers in its unregistered branches. Unofficial reports estimate that the company has hired as many as 18,000 employees since it started operating last year.
The main NOCC office in Makati City had been registered but its 11 branches in four locations in Parañaque were unregistered and did not pay value-added taxes and failed to remit withholding taxes, Guballa said.
He said that under the rules laid down by both the BIR and the gambling regulator Philippine Amusement and Gaming Corp. (Pagcor), all branches and even just floors occupied by Pogo service providers must be registered in their revenue district offices.
The BIR has yet to come up with the exact amount of tax liabilities incurred by NOCC’s Parañaque branches but these could be in the billions of pesos, Guballa told reporters.
Burden of proof
A representative of NOCC, who declined to be identified, said the company had been paying all of its tax obligations through its Makati office. Guballa said the company would bear the “burden of proof” regarding that claim.
He said NOCC could resume operations in Parañaque after it had paid all of its obligations.
Sen. Joel Villanueva, who had sounded the alarm on the influx of Chinese workers into the country, welcomed the “relentless” campaign against tax-dodging Pogos and service providers, but lamented that the interagency Pogo task force was lagging behind in blocking the entry of illegal workers through online casinos.
Since it was organized in May, Villanueva said the task force, which includes the Department of Labor and Employment (Dole) and the Bureau of Immigration (BI), has not mounted a single joint inspection similar to the BIR’s operation against NOCC, he said.
“Had representatives from the Dole and BI joined the BIR’s operation this morning, a proper labor inspection in the office premises could have been done, while immigration officials could have inspected the work visas of the employees. We could have maximized the opportunity that [the] BIR already had,” Villanueva added.
The BIR estimates that foreign Pogo workers number more than 100,000, although some legislators claim there are 400,000 to 800,000.
Guballa said there were 218 Pogos and service providers registered with the BIR or holding Pagcor licenses.
Only 60 licensed Pogos
Pagcor’s website said there were only 60 licensed Pogos in the country with more than 87,000 employees.
Several raids on other illegal online gambling operators have been conducted in Metro Manila and other places this year.