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POGO franchise fee arrears must be settled before resuming operations — DoF

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PHILSTAR

TAX authorities will require Philippine Offshore Gaming Operators (POGOs) to settle their 5% franchise fee before they are cleared to resume operations, a finance department official said.

Assistant Secretary Antonio G. Lambino II said the Bureau of Internal Revenue (BIR) is having a difficult time collecting the 5% franchise tax from licensed POGOs operating overseas, which have taken the position that they are not required to pay since they are based outside the country.

“They are refusing to pay because they say they don’t have a physical office in the Philippines and therefore, they are not liable for the 5% franchise tax. We believe that they are because they earn money here and they operate here through their service providers so they should be treated the same as the POGO licensees that actually have physical offices here,” Mr. Lambino said Wednesday on The Chiefs program of One News.

While this can be solved by passing a bill that will clarify the regulations, Mr. Lambino said there are “various tools” the BIR can use to immediately capture these unpaid taxes.

POGO licensees based overseas, could be required to settle the franchise tax before being issued a tax clearance, which is itself a requirement for resuming operations.

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“That would improve the situation by a lot if we are able to do it through legislation but as I said, there are various tools that are being used… In terms of licensees that are abroad, we now have a situation where we require they pay the license fee before they reopen, so let’s see,” he said.

The government’s anti-coronavirus task force allowed POGOs to resume partial operations in early May provided that they comply with certain conditions such as obtaining a tax clearance covering their 2019 income tax liabilities as well as their outstanding franchise taxes.

He said a special task force, of which he is a member, has been locating and closing down non-compliant POGOs. He said these POGOs were quick to settle their tax obligations after being shut.

Mr. Lambino said the 5% tax comes on top of the Philippine Amusement and Gaming Corp.’s 2% franchise fee, which he said POGO licensees and service providers are paying.

Currently, he estimated the number of registered POGOs at around 60, with 10 maintaining offices here and the rest based offshore. POGO service providers number more than 200, he said.

The government’s tax collections from POGOs and their service providers more than doubled to P6.42 billion in 2019 from P2.38 billion a year earlier. — Beatrice M. Laforga

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