THE GOVERNMENT expects to collect steadily higher revenue from Philippine Offshore Gaming Operators (POGOs) after more clearly defining their tax obligations, the Bureau of Internal Revenue (BIR) said.
Since the new taxes were enacted late last year, the BIR said the government has collected P1.22 billion from the industry.
“As we already have rules and regulations in place for the POGO industry, we expect POGO operations to continue and we foresee an increase in revenue arising from said activities,” the BIR said in a document sent to reporters on Friday.
An Act Taxing Philippine Offshore Gaming Operations, or Republic Act No. 11590, took effect on Oct. 9, 2021. Since the implementation date up to Dec. 31, the BIR collected P1.22 billion from licensees, service providers, and employees.
The law subjects offshore gaming licensees to 5% tax on gross gaming revenue. Foreign individuals employed by a POGO or its service provider must also pay 25% withholding tax on gross income.
The nongaming revenue of Philippine-based POGOs is subject to 25% regular income tax.
Of the P1.22 billion, the government collected P409.9 million in tax on gaming revenues, which includes gaming tax and franchise tax.
Including taxes not covered by the law, withholding taxes accounted for P709.4 million, while income taxes represented P89.7 million.
Value-added and percentage tax came in at P5.3 million, while documentary stamp tax generated P3.3 million. Other taxes amounted to P4.9 million.
“We started collecting from Philippine Offshore Gaming Operations (POGOs) entities and their employees (starting) 2018. This was not without any legal and administrative difficulties,” BIR said.
The passage of the law, it added, created a “clear regulatory and taxation framework for POGO entities and their employees.”
Tax collections from POGOs stood at P2.38 billion in 2018, P6.4 billion in 2019 and P7.18 billion in 2020, according to the Department of Finance (DoF).
With the new taxes, the DoF expects collections from POGOs to hit P76.2 billion by 2023.
POGOs have been leaving the Philippines during the pandemic, with a kock-on effect on demand for office space. — Jenina P. Ibañez
