Bayanihan 2 lessens sustainability of POGOs

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    The recently approved Bayanihan to Recover as One Act (Bayanihan 2) diminishes the sustainability of offshore gaming operations in the Philippines, Colfinancial.com said.

    The newly-signed law includes a provision that increases the base amount from which the franchise tax of Philippine offshore gaming operations (POGO) are computed.

    The provision states a 5-percent franchise tax will be imposed on total bets received by POGOs, Colfinancial.com noted.

    “Previously the franchise tax was computed as a percentage of total bets minus payments from winnings,” it said, adding the government expects this new measure to raise tax collections from POGOs to P17.5 billion this year from P7 billion last year.

    Bayanihan 2 also authorizes the Bureau of Internal Revenue to shut down POGOs that fail to pay the right taxes.

    “Higher taxes could lead to closures of smaller POGOs and in turn lead to increased vacancies in offices,” Colfinancial.com said, noting the sector is already suffering from manpower problems since China clamped down on Chinese nationals coming to the Philippines to work for the industry.

    “We are already seeing softening demand for office space from the POGO industry due to manpower issues and quarantine restrictions brought about by the COVID-19 pandemic.

    The increase in taxes could put further pressure on demand,” it added. Colfinancial.com noted a 70.5 percent fall in office take-ups from the POGO industry in the first six months of the year, faster than the 53.8 percent decline in take-ups from business process outsourcing and the 65.5 percent drop in take-ups from traditional offices.