Overtaxation seen driving POGOs away

THE government runs the risk of losing investment from the online gaming industry if it stiffens regulation and raises tax rates, industry analyst Asia Gaming Brief said.

“A lot of companies perhaps, are feeling the pinch of increased regulation, increased taxes, pressure from different government agencies… They may be moving some of their operations out of the Philippines to other jurisdictions,” Rosalind Wade, AGB Managing Director, said in a briefing late Saturday.

“If you’re going to set your tax rate at 60%… That’s just not viable from an RoI (return on investment) point of view for any kind of investor,” according to Ms. Wade.

Last week, Philippine Amusement and Gaming Corp. (PAGCOR) Chairperson and Chief Executive Officer Andrea D. Domingo said that the Department of Finance (DoF) and the Bureau of the Internal Revenue (BIR) will not overtax POGOs to the extent of losing investment.

Ms. Domingo noted that the Philippines is new to the offshore gaming industry, and the government has little experience with effective regulation.

“I’m sure that they (DoF and BIR) are all very intelligent… (and) will not overtax so that we lose whatever good (the industry brings).”

“If you kill (the industry) with unreasonable measures, then you lose everything, so we have to maintain it while observing everything that is legal. We also want to make it a good place to invest in,” she said.

The BIR is currently running after unregistered POGO (Philippine Offshore Gaming Operations)workers in order to better tax them.

The DoF has said that the government is losing around P2 billion a month for every 100,000 workers, which amounts to P24 billion a year.

Ms. Wade noted that the gaming operators, including foreign workers, also generates income for other industries such as restaurants and real estate.

“They have restaurants, they have bars, they have laundry services, they have many of the businesses, that they are contributing to the local economy here. So if all those went [away], it would create a huge hole,” Ms. Wade said.

Meanwhile, offshore gaming company Oriental Group said that it wants to hire more Filipinos for its operations, as long as they speak Chinese.

“We are trying to increase the number of Filipinos,” Kevin Wong, Oriental Group General Manager, said in a briefing on Friday.

“Actually, now we plan to set up an association where we can also try to teach the Filipinos how to speak Chinese [so that] we can remove the hurdle of language. Actually we can hire all Filipinos. Why not? But then, language is very crucial,” Mr. Wong said. — Reicelene Joy N. Ignacio