MANILA, Philippines – Lawmakers disputed Solicitor General Jose Calida’s opinion that the multi-billion Philippine offshore gaming operators (POGOs) cannot be taxed by the government.
House ways and means committee chairperson Joey Salceda, author of the bill slapping additional taxes on POGOs, said these firms are subject to tax because they operate inside Philippine territory and are deriving income from it.
“The bets are made by people outside Philippines but is enabled by manpower and facilities inside the Philippines. So there is value added or income derived here, therefore taxable,” Salceda said in a statement on Monday, November 18.
“Basic accounting principle: Costs are recognized when revenues are recognized. So aren’t the wages here costs expensed by POGOs?” added the Albay 2nd district congressman, an economist.
Senate Minority Franklin Drilon made the same argument, saying the government can impose taxes on income from compensation for labor or personal services performed in the Philippines.
“The opinion of the OSG (Office of the Solicitor General) is erroneous, misplaced, and misguided. It does not serve the interest of the country. Who will benefit from it? I do not think that we are prepared to face the consequences that may arise from such an erroneous opinion,” Drilon said in a statement.
“POGOs provide a service and the service is completed in the Philippines since all the betting occurs and is completed in the Philippines,” he added.
The Philippine Star reported that Calida, in an opinion submitted to the Philippine Amusement and Gaming Corporation and the Bureau of Internal Revenue, said POGOs earn from bets placed by registered foreign subscribers.
“Ultimately, an offshore-based operator’s income is the placement of bets on its online betting facility – which are derived from sources without (outside) the Philippines,” said Calida.
Senator Joel Villanueva said POGOs cannot use Calida’s opinion to run away from pay taxes in the Philippines.
“If you don’t pay taxes, your operations are illegal, plain and simple…. Our chief tax assessor and collector, the Bureau of Internal Revenue, has already begun clamping down on tax-dodging POGO firms. These companies must settle their obligations and duties to our government, just like any other business entity running their operations here in our country,” the senator said in a Viber message to reporters.
On Monday, the House ways and means committee approved the bill that require POGOs and its foreign workers to pay an additional 5% franchise tax and 25% income tax, respectively.
The online gambling industry has been booming in the Philippines, contributing some P551 billion to the Philippine economy annually.
Chinese nationals, however, have been accused of using POGOs as fronts for money laundering. (READ: A Chinese online gambling worker’s plight in Manila)
China earlier urged the Philippines to halt all online gambling operations, after linking the industry to crimes, such as money laundering, kidnapping, and extortion. – Rappler.com