The new law covering Philippine offshore gaming operations (Pogo) and related activities yielded P1.22 billion in tax take since it took effect on Oct. 9 up to the end of December, a draft report from the Bureau of Internal Revenue (BIR) showed.
The amount includes revenues from offshore gaming licensees, their service providers, and their employees.
The BIR described Republic Act No. 11590 as having clarified the regulatory and taxation framework for Pogo entities and their employees.
Before this, the BIR had been collecting taxes from Pogo and their workers as early as 2018, but “not without any legal and administrative difficulties.”
Of the total amount collected in the fourth quarter of 2021, P709.39 million accounted for withholding taxes, P409.93 for gaming revenues and P89.67 million for income taxes.
The remainder cover P5.33 million in value added tax (VAT) or percentage tax, P3.34 million in documentary stamps tax and P4.96 million in other taxes.
“As we already have rules and regulations in place for the Pogo industry, we expect Pogo operations to continue and we foresee an increase in revenues arising from said activities,” the draft report said.
As of Jan. 31, there were 40 Pogo Licensees and 168 Pogo service providers registered with the BIR.
At the same time, the agency has shuttered seven Pogos for these were not registered with the BIR, they did not register as being subject to the appropriate tax types, or they underpaid or did not pay taxes at all.
In October, Finance Secretary Carlos Dominguez III said that under RA 11590, tax collections from Pogos were expected at P76.2 billion in 2022 to 2023.
BIR mandates payment of gaming tax equivalent to 5 percent of Pogo licensees’ gross gaming revenues, or 5 percent of the agreed, predetermined minimum monthly revenues from gaming revenues, whichever is higher.
Nongaming operations are also slapped with 25-percent annual income tax, like other firms which enjoyed the reduced rate under the Corporate Recovery and Tax Incentives for Enterprises Act. Prior to this, firms were levied 30-percent corporate income tax.
The estimate was that from the 5-percent tax on gross gaming revenues alone, the BIR will collect P35.1 billion during the two-year period. From the 25-percent withholding tax on the gross income of foreign employees, the two-year tax take was expected at P41.2 billion. INQ