Photo: DOF Secretary Carlos Dominguez
Finance Secretary Carlos Dominguez III supports in principle a plan by Albay Rep. Joey Salceda to file a bill seeking to impose a 5 percent franchise tax on revenues generated by Philippine Offshore Gaming Operators (POGOs) and their service providers.
Dominguez said he has yet to see a copy of Salceda’s proposal, which also aims to register POGOs as resident corporations as the basis for their taxability.
But Dominguez pointed out at a news briefing that under existing revenue rules, POGOs are already subject to a 5 percent franchise tax.
Under Revenue Memorandum Circular (RMC) No. 102-2017 issued by the Bureau of Internal Revenue (BIR), “the entire gross gaming receipts/earnings or the agreed or pre-determined minimum monthly revenues/income from Gaming Operations under existing rules, whichever is higher, shall be subject to a Franchise Tax of five percent (5 percent), in lieu of all kind of taxes, levies, fees or assessments of any kind, nature or description.”
“Yes, I haven`t seen the exact proposal, but in general, yes. I think that`s a good idea. But they are already paying a fee. A fee for that,” Dominguez said in response to a query from the media on whether the Department of Finance (DOF) will back Salceda’s proposed tax on POGOs.
Aside from a 5 percent franchise tax, Salceda reportedly said he is also proposing a gaming tax of $10,000 a month per table for a live set-up casino and a $5,000 a month gaming tax for random number generator (RNG)-based games. He also plans to impose $1,000 presumptive corporate income tax per seat for POGOs.
Salceda, who chairs the House ways and means committee, said the panel is studying his proposals.
According to the BIR, it has so far collected P1.63 billion in withholding taxes from POGOs and their service providers covering the period from January to August this year.
These online gaming firms paid P175 million in withholding taxes in 2017 and P579 million in 2018.
BIR deputy commissioner Arnel Guballa said the bureau has so far listed 218 POGOs and their service providers with a total of 108,914 foreign workers.
The BIR earlier ordered the temporary closure of the operations of the Great Empire Gaming and Amusement Corp. (GEGAC) on Sept. 25 for failure to pay the correct amount of taxes to the government.
After initially paying P250 million, and the issuance of an undertaking to settle its remaining tax arrears of P1.050 billion in three separate monthly payments covered by postdated checks, GEGAC was allowed by the BIR to resume operations last Sept. 27.
GEGAC was also required to update its withholding tax payments, and register its employees with the BIR.
Last Oct. 17, the BIR also padlocked the head office in Paranaque City, and branch in Pasay City, of Altech Innovations Business Outsourcing for the firm`s failure to register as a value-added tax (VAT) taxpayer, which is in violation of Section 115(b) in relation to Section 236 of the National Internal Revenue Code.
The shutdown of Altech`s operations and temporary closure of GEGAC were in compliance with Dominguez’s instructions for the BIR to crack down on POGOs and their service providers that fail or refuse to pay the tax liabilities of their foreign workers.
Dominguez has also ordered the BIR to file the appropriate cases against tax-dodging POGO firms.