The Bureau of Internal Revenue (BIR) has eased some of the tax requirements for Philippine offshore gaming operators (Pogos) to resume operations under a less restrictive COVID-19 community quarantine.
Internal Revenue Commissioner Caesar R. Dulay issued a memo, dated May 25 yet but posted on the BIR website only on Friday (July 3), listing down revised guidelines and requirements that both Pogo license holders and service providers needed to comply with before being allowed to operate.
Last May, the BIR issued a different memo with original guidelines and requirements ordered by Deputy Commissioner Arnel S.D. Guballa, who also heads the BIR’s Pogo task force.
Both memos—Revenue Memorandum Circular 46 and 64-2020—had an Annex A of conditions and documentary requirements, which the Inquirer compared.
In Annex A of memo No. 64-2020, the BIR removed specific coverage dates for franchise tax payments, even as the earlier memorandum circular specified the settlement for dues in 2019 and the first quarter of 2020.
On remittance of withholding taxes, both memos specified mandatory payments and documentation for the months of January to April, although the newer memo inserted the phrase “if applicable.”
Also, while memo No. 46 mandated “submission of a notarized undertaking to pay tax arrears for prior years,” the later memo circular removed the phrase “for prior years.”
In the case of Pogo service providers, the earlier memo included among the conditions that Pogos must have had “remitted and paid the withholding taxes due from the months of January to April 2020, including the 25-percent final withholding tax (FWT) due from their foreign employees.”
But in memo No. 64-2020, the provision on foreign workers’ FWT was removed.
The same was true for Pogo service providers’ tax arrears—the phrase “for prior years” present in memo No. 46-2020 was scrapped.
The Inquirer asked Dulay and Guballa if memo No. 64-2020 was meant to make it easier for Pogos to comply with the BIR’s requirements, but they did not reply as of early evening on Friday.
While the BIR had ordered Pogos to settle all their tax dues, operators appeared to have resorted to blackmailing the government with threats of leaving the Philippines over taxation disputes.
The government was also looking into reports that some Pogos had already resumed operations despite being unable to pay their taxes.
Last Monday (June 30), Finance Secretary Carlos G. Dominguez III said the BIR will still collect unpaid taxes from Pogos even if they leave.
SC World Development Group Ltd., a subsidiary of Macau-based Suncity Group which the Philippine Amusement and Gaming Corp. (Pagcor) said already shut down its Philippine operations, was an offshore licensee and “not registered with the BIR,” according to Dominguez.
He said, however, that the DOF would go after taxes due the shuttered Pogo license holder.
On license holder Don Tencess Asian Services Solution Inc., which Pagcor said was about to exit the Philippines, Dominguez had said it shall be “subjected to investigation before it will be given clearance to close by the BIR.”
Officials had declined to disclose how much in back taxes Pogos owed to the BIR.
In early 2020, around 60 Pogos operated with Pagcor licenses, on top of about 218 service providers said to be employing up to 130,000-150,000 people, of which at least three-fourths were foreigners—mostly Chinese.
Pogo licensees employ service providers whose workers directly deal with their clients—online gamblers abroad, mainly from China.
Last month, Dominguez said the Department of Finance (DOF) had estimated that as much as P20 billion a year in corporate and personal income taxes can be generated from Pogos.
As it intensified its campaign against tax-evading Pogos—both in corporate and franchise taxes and remittances of their employees’ income taxes—the BIR collected P6.4 billion in taxes from the industry in 2019.
But prior to 2019, tax revenues from the Pogo sector amounted to just roughly P1 billion per year, according to Dominguez.