The Senate approved on final reading a bill that would slap additional taxes on the revenues generated by Philippine offshore gaming operators (POGOs) and their service providers.
On Wednesday night, June 2, senators passed Senate Bill (SB) No. 2232 with a vote of 17-3-0. Only three minority bloc senators – Senate Minority Leader Frank Drilon, and senators Francis Pangilinan and Risa Hontiveros – opposed the measure.
The Senate passed SB 2232 immediately after passing it on second reading past 8:30 pm on Wednesday.
This was made possible by President Rodrigo Duterte certifying the bill as urgent, allowing senators to forego the mandatory 3-day interval between the second and third reading approval of bills.
If passed into law, SB 2232 would require all offshore gaming licensees – regardless of whether they are based in the Philippines or abroad – to pay 5% tax on gross receipts derived from their gaming operations.
Currently, the franchise taxes of POGOs are computed based on 5% of their net income.
The bill would also slap a 25% withholding tax on the gross income of foreign individuals employed by POGOs and their service providers. The minimum final withholding tax due every month should not be lower than P12,500.
The withholding tax would be computed based on their salaries, wages, annuities, compensation, remuneration, honoraria, and allowances.
The new taxes on POGOs is expected to generate multi-billion pesos worth of government revenues in 2021 and 2022, according to Senator Pia Cayetano. She sponsored the bill in the Senate plenary as chair of the committee on ways and means.
“If we were to combine the 5% gaming tax on the POGOs and the 25% withholding tax on the employees, for 2021, it’s a P28.7-billion projection. And then for 2022, it’s P32 billion,” Cayetano said during the plenary debates on SB 2232 last Tuesday, June 1.
But the Chinese government itself had urged the Philippines to halt all online gambling operations after linking the industry to crimes such as money laundering, kidnapping, and extortion.
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.
For Pangilinan, one of the dissenters of SB 2232, the rise of POGOs in the Philippines came with “serious social costs” and the government should not be allowing the industry to thrive.
“Indeed, whatever amount the BIR (Bureau of Internal Revenue) may collect from POGOs may be used to fund projects to give relief to our people suffering during this pandemic. However, we cannot and should not turn a blind eye from the social costs that [the] POGO industry brings in and has brought upon us, social costs that may be difficult to reverse,” said Pangilinan as he explained his no vote.
“Instead of allowing POGOs to thrive, perhaps we ought to have reallocated funds from other resources to support our pandemic relief efforts,” he added.
Despite the controversies, the Philippine Amusement and Gaming Corporation – which acts as regulator for POGOs – has fiercely fought for the resumption of POGO operations amid the coronavirus pandemic.
Since senators introduced several amendments to their version of the bill, both chambers may have to convene a bicameral conference committee to reconcile the measures. The House or the Senate may also opt to just adopt the version of the other chamber to hasten the process.
Once Congress agrees on a reconciled version of the POGO tax bill, the measure can then be brought to Malacañang for Duterte’s signature. – Rappler.com