The Phil-Asian Gaming Expo featuring offshore games at the SMX Convention Center. July 12, 2019. Jessica Fenol, ABS-CBN News/File
MANILA - The House of Representatives on Monday approved on final reading a bill that will tax persons engaged in Philippine offshore gaming operations (POGOs).
House Bill 5777 was approved by 198 lawmakers, while 13 voted against it and 2 abstained.
In sponsoring the bill during the plenary session last Jan. 26, House Committee on Ways and Means chair and Albay 2nd District Rep. Joey Sarte Salceda cited the additional revenues the measure could generate for the cash strapped government.
“The proposed new version will raise P144.54 billion in total public resource inflows, yielding P31.0 billion more," Salceda said.
"New revenues come primarily from classifying service providers as regular corporations, and including their alien employees in the presumed minimum taxable income system, and allowing PAGCOR and special economic zones to levy regulatory fees of up to 2 percent," he added.
Salceda explained that the following tax rates will apply under the new substitute version:
- Offshore gaming licensees (OGL) will be taxed 5 percent of gross gaming receipts and revenues from other services. This is consistent with international practice, as well as the House’s position on taxing offsite betting activities. (House Bill No. 8065, approved by the House on December 15, 2020, uses gross receipts or commissions, the equivalent of GGR, as its tax base).
- Non-resident aliens who are employees of OGLs are imposed a final tax of 25 percent of gross annual income, remitted annually to the Bureau of Internal Revenue, with presumptive minimum tax base of P600,000 gross annual income. This will be remitted quarterly and in advance.
- Service providers will pay regular corporate income tax, as well as all applicable local and national taxes. The argument that service providers are akin to business process outsourcing (BPO) activities and are thus entitled to export incentives is laid to rest as the law defines OGLs as considered to be “doing business in the Philippines.”
The bill also proposes the following stringent reportorial and administration requirements, while also being fairer on refunds and crediting of final taxes:
- Barring domestic betting on POGOs. Any POGO that admits domestic bets will be closed.
- Allowing licensees to withhold the taxes of their alien employees.
- Approving mandatory contributions collected from OGL employees to be based on the presumed minimum gross annual income provided in the proposal, to improve collection of mandatory contributions from OGL employees.
- Mandating the BIR, Bureau of Immigration, and Department of Labor and Employment to jointly implement a system where they can exchange information among each other to ensure proper collection of taxes.
The bill will be transmitted to the Senate for action.
Members of the Makabayan Bloc led those who voted against the proposed measure.
Bayan Muna Party-list Rep. Eufemia Cullamat explained that they have been opposed to POGOs in the country from the start, due to criminal activities related to the industry.
"Kaakibat ng pagdami ng mga POGO ang maraming anti-sosyal na aktibidad sa bansa: kriminalidad, prostitusyon, trafficking, at mga kahina-hinalang transakasyon mula 2017-2019, ayon sa report mismo ng Anti-Money Laundering Council. Nandiyan din ang negatibong epekto nito sa kalikasan. Matatandaan noong 2019, naibalita ang pagsira sa Island Cove Wild Life Sanctuary, isang Mangrove habitat sa Cavite, para gawing POGO hub,'" she said.
"Ating tinututulan ang balak na pagtanggap ng ating gobyerno sa mga ilegal na pasugalan sa ibang bansa na kadalasan ay ugnay sa iba pang kriminal na aktibidad. Sa paglitaw ng mga POGO ay dumami din ang mga napabalitang kaso ng prostitusyon, ilegal na droga at ang pagpasok ng mga iligal na dayuhang manggagawa," Bayan Muna Party-list Rep. Carlos Isagani Zarate said.
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