The House of Representatives gave its final approval to a bill imposing new taxes on the revenues generated by Philippine offshore gaming operators (POGOs) and their service providers. 

On Monday, February 8, a total of 198 lawmakers approved House Bill (HB) No. 5777 on 3rd and final reading. Only 13 lawmakers voted against the bill, while two abstained from the vote. 

The bill will now be transmitted to the Senate, where it must undergo another 3 successful readings before it can be sent to Malacañang for President Rodrigo Duterte’s signature. 

If passed into law, HB 5777 would slap POGOs with a 5% tax on gross receipts from their operations covered by the law granting their franchise. The franchise taxes of POGOs are currently computed based on 5% of their net income. 

The bill would also require foreign employees working for POGOs and who are earning a minimum annual salary of P600,000 to pay an additional 25% tax on their salaries, wages, annuities, compensation, remuneration, honoraria, and allowances.

House committee on ways and means chair Joey Salceda earlier estimated that the government stands to earn some P144-billion revenue from the proposed additional taxes on POGOs. 

“New revenues come primarily from classifying service providers as regular corporations, and including their alien employees in the presumed minimum taxable income system, and allowing PAGCOR and special economic zones to levy regulatory fees of up to 2%,” Salceda said when he sponsored HB 5777 in the plenary. 

But Deputy Minority Leader Carlos Zarate opposed the passage of the POGO tax bill, saying doing so in effect means the government is giving legitimacy to online gambling, an industry that entered the Philippines because it was deemed illegal in countries like China. 

“Ang mga POGO ay nabuo upang maging ‘legal loophole’ para makapagsugal ang mga mamamayan ng mga bansa kung saan ito ay iligal, partikular sa bansang Tsina. Ating tinututulan ang balak na pagtanggap ng ating gobyerno sa mga iligal na pasugalan sa ibang bansa na kadalasan ay ugnay sa iba pang kriminal na aktibidad,“ said the Bayan Muna representative. 

(POGOs were created to serve as a “legal loophole” so residents from countries where gambling is illegal, like China, can still engage in such activities. We are against the plan of our government to open our country to gambling activities that are not only illegal in other nations but are often linked to other criminal activities.)

China had previously urged the Philippine government to halt all online gambling operations after linking the industry to crimes such as money laundering, kidnapping, and extortion. 

Some POGOs have already left the country due to the coronavirus pandemic and the government’s restrictions on the industry, leaving at least 277,000 square meters of vacant office spaces. 

Agencies like the Department of Finance and the Bureau of Internal Revenue have also clamped down on POGOs for supposedly not paying the correct taxes amounting to over P20 billion.

Despite the controversies, its regulator, the Philippine Amusement and Gaming Corporation, has fiercely fought for the resumption of POGO operations amid the pandemic. – with reports from Ralf Rivas/Rappler.com