THE government’s tax take from Philippine offshore gaming operators (POGOs) and their service providers grew nearly 170% to P6.42 billion in 2019 amid a compliance crackdown, the Department of Finance (DoF) said Sunday.

In a statement, DoF said the total tax generated by the industry totaled P6.42 billion in 2019 from the P2.38 billion a year earlier due to a “sustained campaign… to crack down on errant POGOs and their service providers that have eschewed tax payments.”

The Bureau of Internal Revenue’s (BIR) collections from withholding taxes topped the list at P5.13 billion, followed by P644.07 million in income taxes, P91.13 million in value-added taxes (VAT) and percentage taxes, P81.11 million in documentary stamp taxes and P469.13 million in other taxes from POGOs and their service providers.

According to a report to Finance Secretary Carlos G. Dominguez III, the BIR issued a total of 170 notices last year, allowing the government to collect P27.35 billion in tax liabilities from non-compliant POGOs.

BIR Deputy Commissioner for Operations Arnel SD. Guballa said the agency hopes to eventually collect at least P2 billion monthly.

“Basically we’re going hard against people who are evading taxes,” Mr. Dominguez was quoted as saying.

“Before, we didn’t get a cent from them,” Mr. Dominguez told reporters in a separate interview.

According to government records, there are around 108,914 foreign workers employed by 218 POGO service providers.

“They promised starting the beginning of this year… they will comply. They will register (their) employees, etc. But we have heard from sources that their employees come and go,” Mr. Guballa told reporters last week.

He also said foreign workers are now finding it easier to comply with documentary requirements as the BIR has resolved its problem in issuing Tax Identification Numbers (TINs).

The government requires foreign nationals and non-residents planning to work in the Philippines to obtain a TIN before securing a work permit.

However, Mr. Guballa said the bureau is still having a difficult time tracking worker numbers employed in the industry, especially the foreign ones, since many of them “come and go” on a contractual basis.

In March, Mr. Dominguez said the government loses at least P22 billion yearly in uncollected POGO taxes.

An inter-agency task force was also created to keep track of the total number of foreigners employed by POGO firms and their service providers.

This year, Mr. Dominguez said “there will be no letup” in the DoF’s crackdown on tax-evading POGOs and their service providers.

On Jan. 17, the BIR closed down Xpoint Technology Philippines Corp.’s Pasig City branch, the fourth firm to be padlocked so far, as it was not registered and was evading tax. Last year, the BIR shut down a total of three firms that were not tax-compliant.

The first was one of the biggest service providers, Great Empire Gaming and Amusement Corp.’s (GEGAC) offices in Subic Freeport and in Parañaque City in late September after failing to register for Value-Added Tax. It was then allowed to operate again after making an initial payment of P250 million and agreeing to pay the remaining P1.05 billion.

It was followed by the closure of Altech Innovations Business Outsourcing’s head office in Parañaque City and a branch in Pasay City. Altech reopened after paying P8.2 million in back taxes and committed to settle the remaining P37 million worth of unremitted withholding taxes of its 390 mostly Chinese workers.

The third closure in 2019 involved 11 branches of the “country’s biggest POGO service provider,” the New Oriental Club 88 Corp. for failure to register.

BIR said the company employed around 23,000 foreign nationals as of end-2018 but the company submitted a list to the BIR with just 6,736 foreign workers. — Beatrice M. Laforga

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