Philippines: POGOs tax to be approved with minor changes

The new bill that sets income and gaming taxes for online casinos operated from the Philippines will be approved by The House of Representatives.

The Philippines.- The bill under which Philippine offshore gaming operators (POGO) must pay 5 per cent tax on their gross gaming revenue looks set to be approved with minor changes.

According to the Department of Finance, one of the changes will require all foreign POGO employees to have a tax identification number. The other change prevents the Aurora Pacific Economic Zone and Freeport from issuing new POGO licences.

Under the new bill, those licences that are currently registered will be under the purview of PAGCOR.

The bill states that POGOs will have to pay 5 per cent on gross gaming revenue. Foreigners employed in online casinos and their service providers must pay 25 per cent income tax. 

POGOs brought in US$149.4m in tax payments last year despite the impact of the Covid-19 pandemic and the resulting departure of many firms.

However, House Ways and Means Committee believes that under the new bill, the government could collect PHP13.4bn (US$266.6m) in its first year of implementation.

Last year, the Philippines’ lower chamber tried to impose a 5 per cent franchise tax on overall turnover for POGOs, but online gambling operators began leaving the country. The tax changes were finally suspended in January following a petition to the Supreme Court from foreign gaming groups, but they were reintroduced in February.

According to PAGCOR’s website, the number of POGO licence holders that are currently operating is just 40, compared with 61 before the Covid crisis.

POGOs are returning to the Philippines

Last year, three operators in Manila were granted licences for local online casino platforms.

The Philippine president, Rodrigo Duterte, has said that he allowed online gambling because the country needs money to recover from the Covid-19 pandemic.

According to the Philippine News Agency, Duterte said: “We don’t have money… Now that we need money, the most sensible thing is really just to encourage those activities.”

The possibility of casino gaming on Boracay island has resurfaced in recent weeks after the House of Representatives approved the creation of the Boracay Island Development Authority as a government-owned and controlled corporation (GOCC).

However, the bill was highly criticised by government agencies, local government units, stakeholders and some congressmen who want to protect the island’s environment.

Natividad Bernardino, chairman of the Boracay Inter-Agency Rehabilitation Management Group, said: “The problem of Boracay is one of over-tourism and overdevelopment. 

“What we need in terms of sustaining the rehabilitation and ecological sustainability of the island is a regulatory body instead of a GOCC.”