Tax ‘leakage’ from POGOs estimated at P1.9B as of August

AIDAN HOWE-UNSPLASH

THE tax “leakage” due to incorrect payments by Philippine Offshore Gaming Operators (POGOs) was estimated at P1.9 billion in the eight months to August, a senior legislator said.

Senator Sherwin T. Gatchalian said in a statement on Tuesday that the estimate suggests that “we are not realizing the full benefits of allowing POGO operations in the country.”

The Philippines needs to “consider developing other industries that are sustainable, high-yielding, and long-term,” he added, proposing a renewed focus on the business process outsourcing industry.

Mr. Gatchalian, citing internal research conducted by his staff, said there are discrepancies in the gross gaming revenue declared by POGOs to the Bureau of Internal Revenue (BIR) and Philippine Amusement and Gaming Corp. (PAGCOR).

Indicative gross gaming revenue from January to August, based on the 5% gaming tax payments made to the BIR by POGO operators, totaled P28.36 billion, Mr. Gatchalian said. 

However, the 2% regulatory fee payments to PAGCOR suggest indicative gross gaming revenue for the same period at P66.67 billion, he added, noting as well that PAGCOR’s accounts receivable from POGOs over the same period amounted to P2.3 billion. 

“It’s regrettable that even legitimate POGOS are remiss in the payment of correct taxes,” he said. “This is exactly the reason a tax regime for POGOs was put in place… to reduce uncollected taxes due the government.”

Republic Act 11590 or the Act Taxing POGOs, revenue generated by the gaming tax on offshore gaming licensees must be allocated to implement the Universal Health Care Act (60%), the Health Facilities Enhancement Program (20%), and to attain Sustainable Development Goals (20%).

“Before, we projected that revenue from POGO of around P30-40 billion. Now, the reality is P3-5 billion, so if there are leakages, all the more, the figures are disappointing,” Senate Minority Leader Aquilino Martin D. Pimentel III said at a briefing on Tuesday, according to a transcript issued by his office.

The BIR said this month that taxes generated by the POGO industry amounted to P4.4 billion in the eight months to August, ahead of the P3.91 billion full-year total in 2021 but much less than the bullish pre-pandemic projections for the industry.

The Department of Finance had expected a law regulating POGOs to raise P32.1 billion in 2021, on the assumption that operations will return to pre-pandemic levels.

Looking at the weaker-than-expected revenue and rising crime associated with the industry, Mr. Pimentel said there are “overwhelming reasons to (review) our policy on POGO.”

The senate minority leader said a group of senators is pushing to shut the industry down and expressed the hope that the executive branch will expedite the resulting legislation. — Alyssa Nicole O. Tan