By Vann Marlo M. Villegas, Reporter 

THE Senate on Wednesday approved on third and final reading a measure imposing taxes on Philippine Offshore Gaming Operators and their foreign employees, as the government seeks new revenue sources amid the coronavirus pandemic. 

With 17 affirmative votes, three negative votes and no abstention, the senators approved Senate Bill No. 2232 which sought to amend provisions of the National Internal Revenue Code of 1997 to impose a tax regime for POGOs.

Senators Franklin M. Drilon, Francis N. Pangilinan, and Risa N. Hontiveros-Baraquel voted against the measure.

Certified as urgent by President Rodrigo R. Duterte, the bill was approved on second and third reading during Wednesday’s session. 

Under the bill, offshore gaming licensees, whether Philippine-based or abroad, but are considered doing business in the Philippines will be subject to 5% gaming tax on gross gaming revenues or receipts from their gaming operations. The gaming tax will be imposed in lieu of all taxes.

Foreigners employed by offshore gaming licensees and service providers will also have to pay 25% final withholding tax rate. The measure provided that their monthly minimum final withholding tax should not be lower than P12,500.

Non-gaming revenues of Philippine-based offshore gaming licensees shall also be subject to a 25% income tax. Non-gaming revenues attributed to game offerings or facilities within the Philippines of foreign-based offshore licensees shall be pay income tax equivalent to 25% of gross income yearly.

Senator Juliana Pilar S. Cayetano, sponsor of the bill, inserted a provision stating that 60% of the revenues collected from the gaming taxes imposed on offshore gaming licensees shall be allocated to the following: 60% for Republic Act No. 11223 or the Universal Health Care Act, and 20% each for the Health Facilities Enhancement Program and for the attainment of Sustainable Development Goals.

The Senate also adopted the proposed amendment that a POGO’s foreign employee may be subject to deportation and may be barred from entering the Philippines due to failure to pay taxes.

Mr. Pangilinan, in explaining his vote, said sharp rise of the POGO industry came with “serious social costs,” citing instances of criminal activities involving their foreign workers. He also noted the Chinese government has asked the Philippines to close POGO operations as they were used in “cross-border crimes such as money laundering.”

“Whatever amount the BIR collects from POGOs may be used to fund projects to give relief to our people’s suffering during this pandemic. However, we cannot and should not turn a blind eye away from the social costs that the POGO industry brings and has brought upon us,” Mr. Pangilinan said. 

“Social costs that may be difficult to reverse. Instead of allowing POGOs to thrive, perhaps we ought to have re-allocated funds from other sources to support our pandemic relief efforts,” he added.