A Philippine offshore gaming operator (POGO) service provider has settled its initial tax liability with the Bureau of Internal Revenue (BIR), the second such one to reach a settlement with the tax agency.
Altech Innovations Business Outsourcing will pay its tax liability of P45 million representing the company’s unremitted withholding taxes of its foreign employees, the Department of Finance (DOF) said citing a report from the BIR.
Carlos Dominguez, DOF secretary, said Altech Innovations made an initial payment of P8.2 million to the BIR on Monday and will pay the remaining balance in November and December.
The company also promised to update its 2019 income tax payments.
The BIR said Altech Innovations is operating again as of yesterday after making a commitment to pay its tax assessment.
Based on the BIR’s assessment in coordination with the Philippine Amusement and Gaming Corp. (Pagcor), Department of Labor and Employment (DOLE) as well as the Bureau of Immigration, Altech Innovations employs around 300 to 390 foreigners who are mostly Chinese.
Arnel Guballa, BIR deputy commissioner, said the P45 million settlement only accounted for the employees’ income taxes and not the company’s liability for violating the value-added tax (VAT) registration.
“The problem with these foreign workers, based on the data we gathered from Pagcor, immigration and DOLE, they have this ‘come and go’ scheme that’s why you can’t really determine their tax liabilities,” Guballa said.
But Guballa assured that Altech Innovations’ tax payment was just an initial amount as the BIR continues to look into the books of POGOs.
“We make things simple for now, we go after the foreign workers then the VAT. We can’t do all these things at the same time considering our limited manpower. Assessing the VAT liability is a tedious process,” he said.
Guballa also said Altech Innovations claimed it operated its branch in Pasay City only for three to four months in 2018, which the BIR has to validate with the data provided by other government agencies.
“Reconciliation and substantiation of records are ongoing. BIR records were collected from Pagcor, immigration and DOLE,” he said.
Last September 25, the BIR also ceased the operations of Great Empire Gaming and Amusement Corp. (GEGAC) for failing to pay the correct amount of taxes to the government.
After initially paying P250 million and issuing an undertaking to settle its remaining tax arrears of P1.05 billion in three separate monthly payments covered by postdated checks, GEGAC was allowed by the BIR to resume operations last Sept. 27.
GEGAC was also required to update its withholding tax payments and register its employees with the BIR.
Meanwhile, the DOF said in a statement yesterday it supports in principle a plan by Albay Rep. Joey Salceda to file a bill seeking to impose a 5 percent franchise tax on revenues generated by POGOs and their service providers.
Dominguez said he has yet to see a copy of Salceda’s proposal, which also aims to register POGOs as resident corporations as the basis for their taxability.
But Dominguez pointed out that under existing revenue rules, POGOs are already subject to a 5 percent franchise tax.
“Yes, I haven’t seen the exact proposal, but in general, yes. I think that’s a good idea. But they are already paying a fee. A fee for that,” Dominguez said in response to a query if the DOF will back Salceda’s proposed tax on POGOs.
Aside from a 5 percent franchise tax, Salceda reportedly said he is also proposing a gaming tax of $10,000 a month per table for a live set-up casino and a $5,000 a month gaming tax for random number generator-based games. He also plans to impose $1,000 presumptive corporate income tax per seat for POGOs.
Salceda, who chairs the House ways and means committee, said the panel is studying his proposals.
According to the BIR, it has so far collected P1.63 billion in withholding taxes from POGOs and their service providers from January to August this year.
These online gaming firms only paid P175 million in withholding taxes in 2017 and P579 million in 2018.
Guballa said the BIR has so far listed 218 POGOs and their service providers with a total of 108,914 foreign workers.