Tax authorities warn POGOs to pay tax before reopening

The Philippines’ Bureau of Internal Revenue has reiterated that Philippine Offshore Gaming Operators (POGOs) need to pay a 5-percent franchise tax before they can resume their operations and denied that the levy was a new cost for business.

BIR Commissioner Caesar Dulay said the 5-percent franchise tax on POGO licensees is “not a new imposition nor is it being imposed retroactively,” according to the Philippine government news agency. 

 “From the beginning, our Bureau has maintained the position that the said tax applies to all POGO licensees and operators and there was no change of rules midstream,” Dulay said in his comment to the memorandum sent by the Philippine Gaming and Amusement Corp. (PAGCOR) to the Office of the President (OP) regarding the franchise tax on POGOs. 

PAGCOR had pointed out in its memorandum to the OP that the 5-percent franchise tax was not previously imposed by the BIR, citing as basis an opinion issued by the Office of the Solicitor General (OSG) last Dec. 19, 2018. 

 Dulay, however, cited Revenue Memorandum Circular (RMC) No. 102-2017 dated Dec. 27, 2017 on the “Taxation of Taxpayers Engaged in Philippine Offshore Gaming Operations” as the BIR’s basis for the franchise tax, the report said. 

In his comment to PAGCOR’s memorandum, Dulay also corrected the erroneous claim that POGO operators are being assessed and paying their corporate income taxes, and value added tax (VAT). 

 He said POGO licensees or operators are not being assessed nor paying income tax and other taxes because the BIR’s RMC 102-2017 clearly states that in lieu of such taxes, they are only subject to the franchise tax. 

 “Only POGO service providers are subject to the regular taxes, such as income and VAT. However, both POGO operators and service providers whose employees earn compensation income need to withhold and remit the taxes due from them,” Dulay was cited as saying.

In recent months several POGOs have left the Philippines due to the rising cost of doing business and in some cases growing anti-Chinese sentiment in the country.