POGOs to Face New 5% Tax on Their Online Gambling Turnover as Philippine Government Seeks Fresh Money Source

Online gambling companies in the Philippines are facing some new tax increases as the country’s Government is looking for fresh money flow to help its economic recovery from the coronavirus pandemic.

A few days ago, Franklin Drilon, the Minority Leader at the Philippine Senate, revealed that a newly-signed piece of legislation called Bayanihan to Recover as One was aimed at more than doubling its financial takes from so-called POGOs, which is the abbreviation that stands for Phillippine Offshore Gaming Operators. As revealed by him, a new tax on online gambling turnover is to be imposed by the country’s authorities rather than revenue.

The new piece of legislation states that so-called POGOs will now become subject to a special franchise tax of 5% on their gross bets or turnovers, or the agreed pre-determined minimum revenues on a monthly basis that are generated by their gambling operations. The new tax is to be imposed on offshore gaming license holders, such as gaming agents, service providers, gambling operators, and gambling support providers.

In order to make sure operators would not be able to use foreign currency fluctuations as an excuse to reduce their tax obligations, the Philippine Government has decided that the franchise tax is set to be calculated on the foreign currency’s equivalent to the peso used by the companies, based on the prevailing official exchange rate at the time when the payment was made. Any other action would be considered a fraudulent act violating declarations of taxable income or receipts in the country.

Offshore Gaming Operators in the Philippines Also Hit by Coronavirus Lockdown

If an offshore gambling company fails to comply with the new tax rules, it could become subject to so-called closure orders issued by the Bureau of Internal Revenue (BIR), with the authority taking action against the offenders to make them cease operation.

The new piece of legislation was signed by the country’s President Rodrigo Duterte last week. The Minority Leader at the Senate, who was the one responsible for the addition of the POGO-related amendment, revealed that according to preliminary expectations the Government is expected to collect approximately P17.5 billion from Philippine Offline Gaming Operators by the end of 2020. This figure represents more than twice the amount collected by the Government from the country’s gambling industry in the previous year.

The POGO sector has suffered a significant decline over the past year or so because of the Government’s decision to enhance the oversight of the industry. On the other hand, the coronavirus pandemic lockdown also affected the operators, as it forced them to reduce the scope of their business. According to information provided by the local authorities in August 2020, up 100 offshore gambling operators had decided to exit the Philippine market since the beginning of the lockdown.

According to official data, 60 POGO license holders were supposed to be imposed a hard cap. Only 29 of the official licensees had received the BIR’s approval to resume operations as of September.

Latest posts