Gov’t starts collecting Pogo taxes

MANILA, Philippines—The Bureau of Internal Revenue (BIR) on Friday (Dec. 3) issued the rules on taxes for Philippine offshore gaming operators (Pogos), which the government would add to its COVID war chest.

The BIR’s Revenue Regulations (RR) No. 20-2021—issued by Finance Secretary Carlos Dominguez III and Internal Revenue Commissioner Caesar Dulay—paved the way for the implementation of Republic Act (RA) No. 11590 signed by President Rodrigo Duterte in September.

The BIR guidelines mandated payment of gaming tax equivalent to 5 percent of Pogo licensees’ gross gaming revenues (GGR), or 5 percent of the agreed, pre-determined minimum monthly revenues from gaming revenues, whichever is higher.

Licensees’ non-gaming operations will also be slapped with 25-percent annual income tax, just like other firms which enjoyed the reduced rate under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act. Prior to CREATE, firms were levied 30-percent corporate income tax — the highest in Asean.

The tax reduction under CREATE was intended to generate savings for companies badly hit by the COVID pandemic, which the government hoped would be reinvested while the economy recovered.

Pogo licensees’ non-gaming revenues will also be subject to 12-percent value-added tax (VAT) or percentage tax.

As for Pogo service providers in and out of the country, they must shell out their yearly income taxes, plus withholding tax on purchases of goods and services.

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

But service providers would no longer pay VAT for the sale of goods and properties and services given to Pogo licensees as long as they paid gaming taxes.

Foreigners working in Pogos must also pay a 25-percent final withholding tax on their gross income. This means all foreign—mostly Chinese—Pogo workers needed to secure tax identification numbers (TIN) before employment in the Philippines.

In October, Dominguez said RA 11590 will allow the BIR to collect a total of P76.2 billion from Pogos in 2022 and 2023.

Dominguez had said an estimated P35.1 billion could be generated from the tax on GGR, on top of P41.2 billion from foreign Pogo workers’ personal income taxes.

TSB