THE Philippine Amusement and Gaming Corp. (Pagcor) yesterday said a new law imposing higher taxes on Philippine Offshore Gaming Operators (POGOs) have scared operators to move their businesses to other countries.
Pagcor chair and chief executive officer Alejandro Tengco told lawmakers during the budget hearing of the House committee on appropriations that figures show that the gaming regulator’s revenues did not increase despite the implementation of the law, which was passed last year.
Camarines Sur Rep. Luis Raymond Villafuerte said during the budget hearing of the House committee on appropriations on Pagcor’s revenues that when Congress passed Republic Act No. 11590 (An Act Taxing Philippine Offshore Gaming Operations), “the media hype was (that) the government will have higher revenues.”
Villafuerte, however, conceded that some legitimate POGOs have left the country obviously because of higher taxes while some of them have gone illegal.
“They’re still here but from 60 to 27 remaining. Even the legitimate ones like PlayTech, it’s correct to say that PlayTech has left, right? They’re one of the biggest gaming companies in the world. They’re a legitimate company. Why did they leave?” the lawmaker asked.
Juanito Sanosa Jr., Pagcor president and chief operating officer, replied: “I understand because of the high gaming tax of the POGO.”
Tencgo said the reason why operators are transferring to other countries is the “better tax regime (there).” He said Pagcor will consult with Congress if there is a need to amend the POGO tax regime law arises.
Pagcor also confirmed Villafuerte’s claim that from 60 licensed operators, only 30 are left of which 27 are active.
Pagcor’s claim did not sit well with Albay Rep. Joey Salceda, the law’s principal author, who said “blaming a tax law that was only fully implemented in December 2021 for low tax collections, when all evidence points to a POGO revival by the later quarters is bizarre to say the least.”
“I can’t believe that people will use one quarter of performance of a tax law as basis for amendments. Doesn’t that look a little too agenda-driven rather than evidence-driven? It’s Marites-driven (gossip-driven) policymaking,” Salceda said.
Salceda pointed to property market data which shows that offshore gaming is due for a recovery in the succeeding quarters of the year.
He quoted property market expert Leechiu Consultants which showed that there were 21,000 square meters of new POGO office space leased by around second quarter of 2022, saying “that means the POGOs have adjusted to our laws already, and they are now more comfortable with our regulatory regime, that’s what regulatory certainty does.”
“And because they are now taxed fairly, they are regulated well, and we imposed transparency standards on the sector, they are no longer stigmatized as much. Because of that, office leases for POGOs are up starting May, and we will likely see the tax consequence of that development by Quarter 2 or Quarter 3 of this year,” Salceda said.
“On the other hand, if you look at the POGO transactions for office space during the height of COVID-19 from Quarter 2 2020 to Quarter 4 2022, you will see that almost zero new office space was leased by POGOs. That should explain revenue performance. So that’s the cause, not RA 11590, which gave them more solid footing,” he added.
