The Philippine Offshore Gambling Operator (POGO) industry is already facing lots of government scrutiny and pressure to clean up its business, namely paying the taxes it already owes. A revised POGO tax plan has now been introduced to the House of Representatives by Albay Representative Joey Salceda, adding a new possible burden on operators.
House Bill 5267 aims at clarifying what taxes should be imposed on employees of POGO, GMA reports, As POGOs are companies doing business in the Philippines, their employees’ income shall be subject to tax,” said Salceda.
In contrast to the income taxes that are already expected to be paid by POGO workers, Salceda claims that POGO employees need a specific tax code applicable to them.
“Codifying the tax regime for POGOs will provide the government a broader set of levers with which to monitor and oversee the industry and to stabilize the gyrations in tax revenue intake and enforcement,” he said.
The bill specifically calls for employees to pay a 15% tax on their employer’s salaries, wages, annuities, insurance, remuneration and other benefits, such as their employer’s fees and allowances. It also calls for the POGO to charge a 5 percent tax on gross receipts, which was recently demanded by the Bureau of Internal Revenue (BIR).
Initially, Salceda teased about a week ago this possible increase in tax rates, and everyone seems to be on board. Finance Secretary Carlos Dominguez decided that it would be a good idea without understanding the details of the new legislation.
Taxes are one of the industry’s sore points. In recent weeks, two POGO businesses have been temporarily shut down for failing to pay their taxes in full, reopening only once they have agreed to a payment plan.
Whether or not the industry continues to grow now that the government has become serious about tax collection, remains to be seen. With PHP 20 billion ($390 million) in unpaid taxes, there is a real chance that some operators will simply decide to leave instead of paying up. This chance increases even more with even higher taxes on the way.