Senators demand soak-the-POGOs collection scheme

Senate President Pro-Tempore Ralph Recto cited the huge potential revenues which could be collected from the Philippine Offshore Gaming Operations on a proposal to establish a tax regime for the POGO industry and to tax POGO employees.

According to Recto, the government should have earned roughly P38 billion in 2019 from the POGO industry.

Saying the POGO industry is as huge as the Business Process Outsourcing sector in the country, he mentioned studies from the PricewaterhouseCoopers, a multinational profession service network of firms, and Leechiu Property Consultants, Inc., which estimated that the Philippines could earn as much as P65 billion from the POGO industry.

Sen. Sonny Angara said tax revenues from POGO could fund government programs like the Universal Health Care, pension for the military, and free tertiary education.

As chairman of the Committee on Finance, Angara said he could see that entitlements grow immensely over the years and the need to protect the government and fund these programs.

“Money doesn’t grow on trees; we have to find it somewhere. I think this is a possible area, really, to generate revenues especially in this difficult economic environment,” Angara said.

Sen. Imee Marcos aired her gratitude to Sen. Pia Cayetano, chairperson of the Committee on Ways and Means, for including her (Marcos) proposed Senate Bill 2076, which seeks to tax persons engaged in POGO as among the bills discussed during the virtual hearing Thursday on POGO.

Marcos noted her proposal was aimed at establishing a definitive law which shall settle the so-called “lost potential tax revenues” and address questions with regard to the taxability of POGOs and POGO employees/workers by amending the National Internal Revenue Code.

“We like to be clear and certain that whatever bill or law we come up with will overcome the problems that the Supreme Court (SC) based its temporary restraining order (TRO) on last January,” Marcos said.

The SC, on January 5, 2021, issued a TRO stopping the Bureau of Internal Revenue from collecting a five percent franchise tax on POGOs, a provision included in the Bayanihan to Recover as One law or Bayanihan 2.

Cayetano, chairperson of the Committee on Ways and Means, presided over the hearing on proposed measures establishing the tax regime of POGO, including the taxing of persons engaged in POGO. Senate Bills. 1295, 2076 and House Bill 5777 seek to amend the National Internal Revenue Code of 1977, as amended.

HBN 5777, which seeks to impose income tax on alien individuals employed by offshore gaming licensees an amount equivalent to 25 percent of the salaries, wages, annuities, compensation, remuneration and other emoluments, was passed on third reading by the House of Representatives on February 8, 2021.

Meanwhile, Sen. Lito Lapid pushed for the inclusion of a third-party audit for POGO, authorized by the Philippine Amusement and Gaming Corporation in the proposed measure that seeks to establish a tax regime for POGOs.

Lapid emphasized the importance of ensuring that POGOs were declaring their gross gaming revenue truthfully.

“It is important to have the gaming revenues of POGOs audited correctly to make sure that the government is getting the accurate tax,” Lapid added.

Topics: Ralph Recto , Philippine Offshore Gaming Operations , POGO industry
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