Senate focuses on gross gaming revenue gaps at POGO hearing

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THE head of the Senate Committee on Ways and Means, at Monday’s hearing on the Philippine Offshore Gaming Operators (POGOs), vowed to dig deeper into the implementation of Philippine laws, including taxes collected from POGOs and the legal and regulatory compliance by the third-party auditor consortium tapped to determine the proper Gross Gaming Revenues of licensed POGOs.

The Senate pProbers are also asking the Bureau of Internal Revenue (BIR) to double check the taxes paid by POGOs.

The Senate probe was triggered by the enabling Resolution 225 filed by Senator Joel Villanueva directing the working committees to conduct an inquiry in aid of legislation on the revenues generated by the government from POGOs “vis a vis social costs attendant to the operations of POGOs in the country.”

Senator Sherwin Gatchalian, who is leading the Ways and Means inquiry, focused much of Monday’s hearing on the background and performance of third-party auditor consortium Global ComRCI, which was tapped by the Philippine Amusement and Gaming Corp. (PAGCOR) to verify proper Gross Gaming Revenues of licensed POGOs.

The task of a third-party auditor is to determine “with certainty” the gross gaming revenues earned by POGOs, Gatchalian pointed out, which he said is the basis for the 2-percent regulatory fee collected by PAGCOR and the 5-percent tax collected by BIR.

Gatchalian has asked the BIR to “monitor the tax payments of the third-party auditor as well as the POGOs and their accredited service providers to determine whether they should continue to be allowed to operate in the country.”

The senator said Global ComRCI has a P6-billion consultancy contract with PAGCOR to conduct a third-party audit on POGO finances, signed in 2017.

Gatchalian recalled that in past hearings, his panel had noted that POGOs may have underdeclared their tax payments, as shown by discrepancies between gross gaming revenues they submitted to the BIR and PAGCOR.

In a previous hearing, Gatchalian disclosed findings that “there is an estimated tax leakage of P9.1 billion due to the discrepancy of gross gaming revenue as reported by the BIR, PAGCOR, and POGOs from January to August last year.”

Meanwhile, Gatchalian also asked Pagcor officials why POGO operators involved in crimes appear to have been allowed to continue operating in the country. Atty. Jessa Mariz Fernandez, Assistant Vice President for Pagcor’s Offshore Gaming Licensing Department, said they had already imposed penalties and demerits on erring POGO operators, with one company even slapped with a $10,000 (P500,000) fine.

Ejercito: Consider impact

In the same hearing, Sen. Joseph Victor “JV” G. Ejercito expressed concern on the possible abrupt termination of POGO operations, but suggested a transition period in phasing out the industry.

Ejercito said the country needs to consider the impact of phasing out POGO operations in the country on business and employment. “I am worried about the abrupt termination of this business (POGO). We should cushion the impact of sudden stoppage or ceasing of its operation, especially on business and employment,” Ejercito said.

“We need to consider having a transition period, probably two to three years, before we totally phase out the industry. I agree that the social cause will outweigh the financial benefits,” he added.

According to Ejercito, around 40,000 POGO employees will be affected should the abrupt shutdown of POGO operations be executed. On the other hand, slowly phasing out the industry will give POGO workers a chance to find new jobs and alternatives or options, he said.

At the same time, Sen. Ronald “Bato” Dela Rosa urged Pagcor to revoke the licenses of POGOs involved in crimes. “Don’t be afraid of them. Tell them that they are here in our country and that they should respect us. It’s about time that you should assert your supremacy over them,” Dela Rosa stressed during the public hearing conducted by the Committee on Ways and Means.

He informed the committee that Senator Grace Poe’s privilege speech last December 14 on the abduction of a Filipina in Pasay City by certain online gambling operators has been resolved and three Chinese nationals have been jailed. He urged the victim to file criminal charges against the suspects for kidnapping. Dela Rosa said the suspects were only slapped with charges of illegal possession of firearms.

Image credits: Roy Domingo