DOF: Tax take from Pogos down in 2021

MANILA, Philippines—The tax collection from Philippine offshore gaming operators (Pogos) fell to only P2.05 billion during the first seven months of 2021 due to the exodus of many players amid bigger taxes slapped here and the Chinese government’s intensified crackdown on online gambling in the mainland.

Finance Secretary Carlos Dominguez III told reporters that the corporate plus personal income taxes from Pogo industry workers collected in 2020 was a bigger P7.18 billion—an upward trend from P6.42 billion in 2019, and P2.38 billion in 2018.

In 2020, the Bureau of Internal Revenue (BIR) ordered Pogos and their service providers to first pay their tax dues before they could resume operations when the government eased COVID-19 lockdown restrictions.

But some Pogos eventually left the country as gaming operators that were based outside the Philippines contested the BIR’s rules, specifically the payment of 5-percent franchise tax which they claimed should apply only to those operating in the country.

The latest data from the state-run Philippine Amusement and Gaming Corp. (Pagcor) showed that only 36 Pogo licensees were left operating as of August 2021, out of the 41 licensed gaming operators. Before the COVID-19 pandemic struck, at least 60 Pogo companies operated in the Philippines in early 2020.

Pagcor data also showed 133 accredited service providers in August, down from up to 218 firms employing around 130,000-150,000 people, many of which are foreigners, mostly Chinese.

Licensees employed service providers, whose workers directly dealt with their clients — online gamblers abroad, mainly in China, where gambling was illegal.

Prior to the pandemic, Dominguez said that as much as P20 billion in taxes could be collected from Pogos each year.

However, Dominguez last week said that China’s crackdown on online gambling since 2018, part of which required Chinese payment systems to report outflows estimated to reach $140 billion yearly, discouraged clients in the mainland.

Dominguez said Pogo players had been closing shop mainly as their source of gambling money — China — was “drying up.”

Under Republic Act (RA) No. 11590, or the law signed by President Duterte in September which imposed additional taxes on Pogos to be fully implemented in 2022, a total of P76.2 billion may be collected from the sector in 2022 and 2023, Dominguez said.

The finance chief said an estimated P35.1 billion could be generated from the 5-percent tax on gross gaming revenues, on top of P41.2 billion from the 25-percent final withholding tax from gross income of foreign workers in Pogos.

TSB