NOVEMBER 19, 2019 – The controversial Chinese-operated offshore gaming companies must pay taxes, the chief presidential counsel said on Tuesday, asserting the goverment’s inherent authority to tax any entity or individual.
Secretary Salvador Panelo, who also acts as the presidential spokesman, took the side of the Department of Finance’s (DOF) in the dispute to impose taxes on Philippine Offshore Gaming Operators (POGOs).
The Office of the Solicitor General (OSG) has been opposing the levy saying the gaming sector cannot be taxed as it earns from bets placed by registered foreign subscribers.
“For POGOs that are domestic corporations, they are covered by Section 23 (E), Chapter II of the National Internal Revenue Code (NIRC) and their income shall be subjected to Philippine taxes regardless of whether the same was derived from a source outside of the Philippines,” Panelo said.
“As for those POGOs considered as foreign corporations, they too are taxable but only for income which they derived from sources within the country. This is pursuant to Section 23 (F), Chapter II of the NIRC,” he added.
The Malacañang senior official, however, noted the OSG’s position was issued in response to an official from the Philippine Amusement and Gaming Corporation (PAGCOR) and may be subject to change.
“We trust that the DOF, together with the [Bureau of Internal Revenue], has the competence to evaluate the respective charters and operations of these entities in order to subject them to Philippine taxes in accordance with the law,” Panelo said.
“This Administration will not be stymied nor estopped by technicalities caused by the exploitation of developing technologies in collecting what is due the government,” he furthered.
The House Committee on Ways and Means unanimously approved yesterday the proposed House Bill No. 5267, which sets a 5 percent franchise tax for Philippine Offshore Gaming Operators (POGOs).
The revenue measure also seeks to impose a 25 percent income tax on workers earning $1,000 or P50,000 per month. It is expected to raise P45 billion for the national government.
Last September, the government threatened to shut down POGOs that have failed to comply with tax liabilities of their foreign workers.
Tax liabilities of POGOs have grown to P21.62 billion despite the issuance of 130 letter-notices, the DOF reported. (Karen Macalalad / MM)