Online gaming revenues down 50%

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    The Philippine Amusement and Gaming Corp.’s (Pagcor) online gaming revenues fell by almost 50 percent due to the limited operations of the Philippine offshore gaming operators (POGO) since the start of lockdown measures due to the coronavirus disease 2019 (COVID-19) pandemic.

    Jose Tria, Pagcor assistant vice president for offshore gaming licensing, told reporters yesterday Pagcor’s monthly regulatory fees of around P600 million per month were reduced by almost 50 percent since only 32 out of 60 POGOs were allowed to resume operations, and on a limited 30 percent capacity.

    Also, only half, or 111 of the 218 accredited POGO service providers, were allowed to resume operations after they were cleared by the Bureau of Internal Revenue (BIR).

    “Our monthly regulatory fees of around P600 million pre-COVID is now down by almost half. This should have been lower if not for the minimum guaranteed fees which allows PAGCOR to impose higher regulatory fees than two percent of POGOs’ gross gaming revenues following the ‘whichever is higher formula’,” Tria said.

    As the lockdown measures, as well as tax issues, ramped up pressure on the sector, Tria said the licenses of five POGOs were already cancelled, another five are suspended, while 42 service providers have requested cancellation of their accreditation.

    In June, Tria also said several POGOs have decided to leave the country amid some issues on taxes slapped on the industry.

    Carlos Dominguez, Department of Finance (DOF) secretary, said last Wednesday some industry players have started canceling their lease contracts due to lack of business, amid clampdowns from the Chinese government.

    However, POGO entities in the country will have to undergo first an audit from the BIR before closing down to make sure that the correct amount of taxes is paid.

    “Last night I got a call from one of the owners of a building in Makati who is saying that his POGO and service provider clients have started canceling their lease contracts for lack of business. I think the Chinese government is clamping down on money transfers… the Chinese government has also started canceling passports of those people servicing the POGO industry,” Dominguez said during the Senate finance committee’s hearing on DOF’s 2021 budget earlier this week.

    Dominguez however said in a Viber message to finance reporters before a Philippine registered entity can close its business, it is required to get a clearance from the BIR.

    “This triggers an audit where the BIR can determine if they have paid the correct taxes,” he said.

    He added the issue is “not so much on POGO revenues,” but more on the impact to real estate values and businesses. “Obviously, the income tax and value added tax collection from this sector will be affected,” Dominguez said.