MANILA - The House of Representatives has started considering on second reading the substitute bill to House Bill 5777 taxing persons engaged in Philippine offshore gaming operations.
House Committee on Ways and Means Chair Rep. Joey Sarte Salceda sponsored the bill during the plenary session through teleconference, citing the additional revenues it will generate for the cash strapped government.
“The proposed new version will raise P144.54 billion in total public resource inflows, yielding P31.0 billion pesos more. 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 said.
Salceda explained that the following tax rates will apply under the new substitute version:
- Offshore gaming licensees (OGL) (or the POGOs themselves) – 5% of gross gaming receipts and revenues from other services. This is consistent with international practice. This is also consistent with 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).
- Nonresident aliens who are employees of OGLs – A final tax of 25% of gross annual income, remitted annually to the BIR, with presumptive minimum tax base of P600,000 gross annual income. This will be remitted quarterly and in advance.
- Service providers – Regular corporate income tax, 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.”
Salceda also said the bill proposes more stringent reportorial and administration requirements, while also being fairer on refunds and crediting of final taxes.
- This bill bars domestic betting on POGOs. Any POGO that admits domestic bets will be closed.
- The proposed substitute also improves upon administration by allowing licensees to withhold the taxes of their alien employees.
- This also allows mandatory contributions collected from OGL employees to be based on the presumed minimum gross annual income provided in the proposal. This will help improve the collection of mandatory contributions from OGL employees.
- The new proposal also mandates the BIR, BI, and DOLE to jointly implement a system where they can exchange information among each other to ensure proper collection of taxes.