AN administration lawmaker yesterday said an early review of the new law imposing higher taxes on Philippine Offshore Gaming Operators (POGOs) would be necessary to address their “exodus.”
Camarines Sur Rep. Luis Raymond Villafuerte said the exit of POGOs may prompt Congress to work with the Philippine Amusement and Gaming Corp. (PAGCOR) for possible amendments of RA 11590, which he said the Marcos administration needs to raise more cash for its priority programs.
“We may have to take stock of RA 11590 (An Act Taxing Philippine Offshore Gaming Operations) and possibly introduce amendments that could put a stopper to the exodus of POGOs and, hopefully, lure back those that have left and attract other online gaming firms currently based elsewhere,” Villafuerte said.
Pagcor officials, in a budget hearing last Wednesday, said the new law imposing higher taxes have scared operators to move their businesses to other countries.
On Villafuerte’s questioning, Pagcor chair and chief executive officer Alejandro Tengco told lawmakers during the 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.
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.”
Villafuerte said that with the new government in need of much bigger revenue streams to adequately fund its priority social welfare programs, among others, the Congress may have to engage the Pagcor in an early revisit of the POGO law “to find out if rationalizing the tax rates or offering additional incentives are necessary to prevent the remaining POGOs from leaving and enticing those that have left since RA (Republic Act) 11590 took effect to return to our country.”
He pointed out that because half of Pagcor’s gaming revenues are remitted to the national government (NG), a bigger revenue take, from sources like POGOs, will naturally let the Marcos administration spend more on its nation-building programs, particularly those on uplifting the lives of marginalized sectors.
Among the project-beneficiaries of Pagcor’s annual remittances to the national government are the Universal Health Care Program (UHC) and the Health Facilities Enhancement Program (HFEP).
Villafuerte said that with “a larger revenue take, particularly from the lucrative online gaming, the government could, for example, provide adequate funds for its planned social safety nets, such as the higher monthly pension for senior citizens, the cash aid for solo parents and the Libreng Sakay free bus rides along EDSA.”
RA 11590, signed by former President Duterte, imposed on offshore licensees a 5 percent gaming tax based on gross gaming revenue (in lieu of all other direct and indirect national and local taxes); a 25 percent non-gaming income tax on all taxable revenue sources in and out of the Philippines, if the licensee is based here, or 25 percent non-gaming tax on taxable income derived from the Philippines only, if the licensee is based abroad; and a two percent tax on their gross revenues as regulatory fees.
Moreover, the law imposed a 25 percent final withholding tax (FWT) on these POGOs’ foreign employees assigned to the Philippines, and a 0-35 percent graduated individual income tax on these aliens for any income earned from all other sources in the Philippines; and regular income tax on the net taxable income of these POGOs’ service providers.
As defined by RA 11590, offshore licensees are overseas gaming operators that are duly licensed by the PAGCOR or any special economic zone (SEZ) or freeport or tourism zone agency or tourism zone to do offshore gaming operations and accept bets from bettors outside the Philippines.
