FINANCE officials on Thursday defended related bills taxing Philippine offshore gaming operators (POGOs) in a move seen to provide additional funds for the cash-strapped government, whose revenue base was eroded during the pandemic’s crippling lockdowns.
Appearing at a virtual hearing of the Senate Ways and Means Committee chaired by Sen. Pia Cayetano, officials led by the Bureau of Internal Revenue (BIR) sought timely enactment of revenue-raising measures to “address the pandemic and pull the economy out of recession.”
This, as the BIR said that its projected collections from the POGO sector in 2021 could contract by over 45 percent.
It reported a 68.63-percent plunge in January 2021 figures (P372.2 million from P1.43 billion in the same period in 2020), as the impact of prolonged quarantines hit many gaming operations.
Read also “Revenue collected from POGOs to contract by 45.37% this year”.
Among the pending measures under consideration are Senate Bill 1295, authored by Senate President Pro Tempore Ralph Recto, seeking to establish a POGO tax regime for POGOs; and Senate Bill 2076 filed by Sen. Imee Marcos entitled, “An Act Taxing Persons Engaged in Philippine Offshore Gaming Operations adding a new section in the National Internal Revenue Code,” as well as House Bill 5777, imposing levies on the offshore entities operating in the country, estimated to raise P144 billion in fresh revenues.
Awaiting its Senate counterpart version, HB 5777 was approved in the House of Representatives in February, and aims to impose a 5-percent tax on gross receipts, and 25-percent tax on salaries and other remunerations received by POGO foreign workers earning P600,000 annually.
Priority bills
The proposal for a separate tax regime for POGOs was listed among the priority
measures of the Legislative-Executive Development Advisory Council (Ledac), as lawmakers backed measures to tap additional source of revenue in the wake of last January’s Supreme Court-issued temporary restraining order, blocking imposition of a 5-percent franchise tax on POGOs, as provided in the Bayanihan to Recover as One Act or Bayanihan 2.
The High Court ruled the tax as a “rider” or a subject matter not covered by the law’s title, and thus illegal.
At Thursday’s hearing, however, Minority Leader Franklin M. Drilon sought the confirmation of BIR Deputy Commissioner Arnel Guballa, that the proposed amendments to the National Internal Revenue Code (NIRC), once passed, would cure the problem with the “rider” and allow BIR to proceed with collecting from the POGOs the disallowed tax.
Finance Department officials joined economic managers in pressing passage of enabling legislation seeking to tax POGOs which were deemed among the “under-tapped revenue sources for the cash-strapped government.”
The move to maximize revenue from the POGO sector was begun in 2019 by Finance Secretary Carlos Dominguez III, who led an interagency initiative to reconcile data and systems among the Department of Labor and Employment, Bureau of Immigration and the BIR, among others. This resulted in a sharp increase in the number of companies and POGO workers, previously under the radar, but were forced to comply with government regulations, subsequently boosting state revenue.
Among the senators who expressed support for the continuing initiatives to optimize collections from the sector were Recto, Economic Affairs panel chief Marcos and Sen. Manuel Lapid.
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