State-think tank National Tax Research Center (NTRC) said it is not farfetched the Philippines would be a major player in the global offshore gaming industry, given its advantages in the availability of office space, labor, tax incentives, and technology.
In a tax research journal posted in its website titled “Profile and taxation of Philippine Offshore Gaming Operations (POGOs),” the NTRC said by next year, the global offshore online gaming market is expected to exceed $60 billion, with Asia Pacific surging ahead.
The report said among the 10 Asean-member countries, the Philippines is the first and only country to date that gives license to online or offshore gaming.
“Although considered to be a new gambling activity in the country, offshore gaming is proving to be a promising revenue generating activity,” the government’s tax research arm said.
According to the report, from 2016 to 2018, the Philippine Amusement and Gaming Corp. (Pagcor) has collected P12 billion from POGOs.
“The industry has yet to reach its fullest potential and still has enough elbow room for growth and improvement in terms of tax collection, safeguards, audit, among others,” it added.
One of the advantages of putting up offshore gaming in the country is it is a legal and licensed activity in the country, the report said.
This ensures proper regulation and monitoring by government bodies.
“Also, offshore gaming operations are technology-driven enterprises which rely on robust telecommunication networks, high capacity communication facility, office space, and highly technical workforce. The country is known for low real estate acquisition and operational costs as well as competitive labor costs compared to other major Asian cities,” the NTRC said.
“There are also plenty of available prime grade buildings located in safe, secure, accessible areas, equipped with high speed fiber optic telecommunication facilities and uninterrupted power supply necessary for 24/7 operations,” it added.
The report also pointed out that Filipinos are known to be highly skilled and educated, which makes doing business in the country easier.
It added that the Philippines’ proximity to most Asian countries is an advantage for gamblers in Macau, China, Japan, and Korea.
“(This) makes the country an excellent place to do business,” the study said.
The Bureau of Internal Revenue said it has so far collected P1.63 billion in withholding taxes from POGOs and their service providers covering the period January to August this year.
These online gaming firms paid P175 million in withholding taxes in 2017 and P579 million in 2018.
The bureau has so far listed 218 POGOs and their service providers with a total of 108,914 foreign workers.
Meanwhile, the NTRC also released a separate study titled “Profile and taxation of the Integrated Resort (IR) industry in the Philippines,” which said while the concept of IR is fairly new to the country, it has already made a significant contribution to the economy.
The total gross revenue of the four IRs operating in the Philippines increased from P91 billion in 2016 to P138 billion last year.
The total number of employees also jumped by 12 percent over the two-year period to 23,170 in 2018.
These IRs are Resorts World Manila, Solaire Resort and Casino, City of Dreams, and Okada Manila.
“For a country like the Philippines, where tourism is considered as a vital industry, the establishment of IRs is considered a larger spectrum of tourism product that is viewed to enhance the country’s destination appeal,” the report said.
The NTRC said the boost in tourism generated by the establishment of IRs in the country is no doubt helping the economy in terms of investments, revenues, and job creation.
“Given this, it is important that the country’s business environment remains attractive with all the fundamental economic and regulatory policies in place to increase business momentum,” the report said.
On the other hand, the study noted a need for all the business components of the IRs, most especially their casinos, to be mandatorily accredited with the Department of Tourism and Pagcor before they can continue operating.
“This is to ensure that they comply with the minimum standards in the operation of the establishment to ensure the safety, comfort, and convenience of every tourist,” the report said.