BIR shuts tax-dodging Pogo service provider

FIRST TO BE SHUTTERED Authorities say Great Empire Gaming and Amusement Corp is registered in Subic so it is supposed to enjoy preferential tax treatment only in the free port, not in Libis, Quezon City, where the bulk of its operations is located. —GRIG C. MONTEGRANDE

MANILA, Philippines — More than 8,000 workers, mostly Chinese, lost their jobs on Wednesday after the taxman shuttered one of the biggest service providers of the Philippine offshore gaming operators (Pogo) sector for operating without Bureau of Internal Revenue (BIR) registration.

But Great Empire Gaming and Amusement Corp. (Gegac) can operate again provided it pays the deficiency taxes, said Internal Revenue Deputy Commissioner Arnel Guballa.

“They just have to settle the unpaid tax. And then, the closure will be lifted upon full payment,” he said.

‘Oplan Kandado’

The BIR team led by Guballa, together with the Quezon City police, padlocked the offices of Gegac in Libis, Quezon City.

The BIR’s Task Force Pogo also closed down the company’s satellite offices in Parañaque City and Subic Freeport, making Gegac the first Pogo service operator to be shut down under the “Oplan Kandado” program.

Wilma Eisma, Subic Bay Metropolitan Authority chair and administrator, said the BIR padlocked the Gecac office at Gateway Hub.

Freeport registered

“Results of the investigation showed that Gegac is not registered for value-added tax (VAT) purposes, violating Section 108 vis-à-vis Section 115 of the Tax Code as certified by the Revenue District Office 19 [in] Subic Bay Freeport Zone,” the BIR said.

Guballa said Gegac was registered in Subic—hence was supposed to enjoy preferential tax treatment inside a freeport zone—but it instead established the bulk of its operations in Quezon City.

“This company here [in Quezon City] is not registered with us as VAT-registered taxpayer. Under the Tax Code, the BIR has the right to close or suspend its operations,” Guballa said.

He said the company started to operate last year.

The operation to shut down Gegac was done in compliance with Finance Secretary Carlos Dominguez III’s order to padlock Pogos and their service providers that neither pay correct corporate income taxes nor remit their workers’ withholding taxes, according to Guballa.

P21.6B in tax liabilities

At a meeting on Sept. 13, Dominguez lamented the “slow” collection of withholding income taxes from Pogos even though the BIR had already issued 130  notices to collect P21.62 billion in tax liabilities.

“Why don’t we start closing them down so they will answer these assessments. Those who don’t pay or respond to your assessments, clamp them down,” Dominguez told top BIR officials led by Commissioner Caesar Dulay during the meeting.

And two weeks later, the BIR closed down Gegac.

Dominguez told reporters that Gegac had about 8,100 foreign workers in Quezon City on top of a few hundreds more in Parañaque and Subic.

After Gegac was padlocked, a TV cameraman saw several white vans—supposedly shuttling workers to and from their workplace—being stopped from entering the building premises.

11 floors

Reporters also saw hundreds of workers going down the building, but a security guard expressed concern that they were being brought to the basement instead of the lone gate if they were supposed to leave their office.

Guballa said all of the about 500 Chinese workers were allowed to leave their work stations.

The BIR official said the workers—many of them still “bata,” or of young age—were spread out across 11 floors.

While he did not disclose how much in taxes Gegac owed, Guballa said the BIR had sent the company a notice demanding it pay its liabilities two to three months ago.

“The period within which to comply already lapsed—we gave them a quite long grace period. So we have no recourse but to close them down,” Guballa said.

More than 100 unregistered

He said the BIR planned to make “surprise visits” to the more than 200 Pogo service providers in the country as the agency targets to collect P2 billion a month in withholding income taxes from these companies.

Guballa noted that while Pogo service providers were already registered with gaming regulator Philippine Amusement and Gaming Corp. (Pagcor) to do business here, more than 100 of them were not yet registered as taxpayers with the BIR.

He said the BIR was keeping a close watch on unregistered Pogo service providers, which the agency can either shut down or hale into court with a tax evasion case “if evidence warrants it.”

In a statement, Sen. Joel Villanueva said “the joint operation of the BIR and the Quezon City Police is the kind of synergy that we need from government agencies in enforcing our laws.”

Kidnapping, prostitution

The rise of Pogos, which are manned mostly by Chinese workers, has created social tension with Filipinos and bred crime, including kidnapping and prostitution catering to the workers.

The Bureau of Immigration (BI) recently arrested four Chinese wanted by their government for such crimes as kidnapping and forgery.

In a statement, the BI said Shi Chun Tan, Cai Rong Li and Li Shao Bai were arrested on Monday in their apartment in Bonifacio Global City upon the request of the Chinese Embassy.

The three were wanted for kidnapping and obstruction of justice.

Last week, another Chinese citizen, Liang Yang, was held upon his arrival at Ninoy Aquino International Airport. The 29-year-old Liang was immediately sent back to China to face the charges filed against him for forging company seals. —With reports from Jovic Yee and Joanna Rose Aglibot