A MEASURE proposing a 30% tax rate on the Philippine Offshore Gaming Operator (POGO) industry has been filed at the Senate.
Senate President Pro Tempore Ralph G. Recto, in Senate Bill No. 1295,said the tax rate will apply to “the taxable income derived in the preceding taxable year from all sources within and without the Philippines.”
The proposed law covers Philippine-based operators, and local gaming agents and service providers.
Mr. Recto said the tax regime aims to address the confusion on whether POGOs should be taxed. In the bill’s explanatory note, he said the amendment to the national tax code is “necessary to remove any doubt and avoid the confusion whether or not POGOs are taxable in our jurisdiction.”
The Office of the Solicitor General has clarified that foreign-based POGO firms are not covered by local taxes. In Mr. Recto’s version, he also proposed to levy an income tax rate worth 30% of the gross income of foreign-based POGOs
The bill provides for a 5% franchise tax on gross receipts, already enforced under Revenue Memorandum Circular No. 102-2017.
Currently, POGOs must pay a 5% franchise tax, collected in lieu of all kinds of taxes; normal income tax, value-added tax and other taxes on other related services income from non-gaming operations, among others.
Senator Pia S. Cayetano, who chairs the Ways and Means Committee, said she is open to measures that will tax the POGO industry.
“If you’re doing business in the Philippines, dapat mata-tax ka (you need to be taxable),” Ms. Cayetano said in a briefing Tuesday.
“Like anything else basta sakop ng trabaho ko (within my area of responsibility) I always have an open mind; (but) taxing them in what sense?”
A counterpart measure, House Bill No. 5777, has been approved by the House Committee on Ways and Means and is currently awaiting plenary action.
The House version sought to impose an income tax on foreign nationals working in offshore gaming firms, amounting to 25% of the salaries, wages, compensation and other fees. It also carries a 5% franchise tax on gross revenue or receipts.
The POGO industry will be investigated at the Senate this week with the Committee on Labor, Employment and Human Resources Development looking into the influx of unregistered foreign workers.
The Tuesday hearing will also tackle the industry’s failure to remit taxes to the Bureau of Internal Revenue and threats to national security. — Charmaine A. Tadalan