THE Commission on Audit (COA) may conduct an audit of the gross gaming receipts (GGR) of Philippine Offshore Gaming Operators (POGOs) while the Philippine Amusement and Gaming Corporation (PAGCOR) is still looking for an independent third-party auditor, the Department of Justice (DOJ) has said.
Justice Undersecretary and officer-in-charge Raul Vasquez said that while Section 125-A of the National Internal Revenue Code states that POGO earnings should be audited by a third-party firm, the same section also provides that COA may conduct a post audit independent verification of the GGR determined by the third-party auditor.
“Taking into consideration the foregoing circumstances and to ensure that the aim and objective of the law is met, there appears to be legal basis and sound fiscal reasons for COA to audit the GGR of the POGO while PAGCOR is still in the process of procuring the services of a qualified third-party audit platform in accordance with the provisions of R.A. No. 11590 and R.A. 9164,” Vasquez said in a June 30 letter to COA.
“Without this audit, POGOs would be able to defraud the government, i.e., PAGCOR and the Bureau of Internal Revenue, of its rightful share in the GGR, by declaring a lower amount,” he added.
The DOJ move was in response to a letter from COA chairperson Gamaliel Cordova who sought the department’s legal opinion if they can audit POGO earnings.
In seeking the DOJ’s guidance, Cordova pointed to Section 8 of RA11590 or the “Act Taxing Philippine Gaming Operations” that requires PAGCOR to engage the services of an “independent, reputable, internationally known and duly accredited third-party auditor that would determine its gross gaming revenues or receipts.”
In March this year, PAGCOR terminated its contract with consultant Global ComRCI due to the latter’s violation of the Government Procurement Reform Act, prompting the state-run gaming agency to request COA to conduct the audit.
Cordova has said that state auditors can examine the GGRs of POGOs as this is within its constitutional mandate and in accordance with the relevant provisions of Presidential Decree 1445, or commonly known as the Government Auditing Code of the Philippines.
The DOJ refrained from rendering a legal opinion on the issue, noting that COA has already adopted a definite stance on the matter.
However, it acknowledged that the audit of the GGR of the POGO is necessary to ensure that the proper gaming tax on services rendered and regulatory fees are imposed and collected for the government.
Last year, the Department of Finance said POGO-related crimes may result to the country losing from P16.7 billion to P26.2 billion in direct foreign investments.
“While POGOs are estimated to have contributed P53.1 billion to the Philippine economy in 2022, their continued operations may put our bilateral relations with China at risk,” the DOF said in a position paper submitted to the Senate Committee on Ways and Means.
The DOF said data from the Anti-Money Laundering Council also showed that out of the P54 billion worth of POGO transactions from 2017 to 2019, 26 percent were deemed suspicious transactions.
For its part, PAGCOR presented to the senators a roadmap which it said it will adopt to develop the POGO industry and address the “social ills” associated with its operations.
