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Duterte signs POGO tax regime

September 23rd, 2021

Duterte signs POGO tax regime; Salceda says tax policy to create P144 billion in revenues over next five years for COVID relief, economic recovery

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) thanked President Duterte for signing Republic Act No. 11590 or the Fiscal Regime for Philippine Offshore Gaming Operations (POGOs) on September 22, 202. The House tax panel chair, who also principally authored and sponsored the law, said that the fiscal regime will help stabilize the POGO industry, which “was wracked by the uncertainty due to the Supreme Court temporary restraining order on their tax treatment.”

“President Duterte was very clear: He will only allow gaming if they pay the right taxes. This will make sure they do.” Salceda said.

The proposal sets a 5% tax on gross gaming revenues (GGR) of offshore gaming licensees, commonly known as POGOs. It also requires alien employees to have a Tax Identification Number.

A fine of PHP20,000 will be imposed on the OGL for every alien employee without a TIN.

Salceda’s authored measure also establishes an exchange of information system between the Bureaus of Immigration and Internal Revenue, Philippine Amusement and Gaming Corporation (PAGCOR), and other agencies to ensure that tax and immigration enforcement is stronger.

Alien employees are imposed a final tax of 25% of gross annual income, remitted annually to the BIR, with presumptive minimum tax base of P600,000 gross annual income.

Non-gaming income of OGLs, as well as that of POGO service providers, will be taxed at regular rates.

The tax regime also allows regulatory agencies such as PAGCOR to impose a 2% regulatory fee.

The law, Salceda says, will generate 15.73 billion pesos in total public resources in its first full year and 144.54 billion over the next five years.

“It could be bigger than some of the other tax reforms we enacted recently. So, I thank President Duterte for acting urgently on this.”

“The most important sentence here is that POGOs are considered “doing business in the Philippines.” They cannot escape our jurisdiction or the reach of our tax authorities. It is the single most consequential sentence in that law.” Salceda said.

POGOs to operate, but under stricter terms

Salceda says that the measure will help the POGO industry “recover, since we’ve lost some of them to Cambodia already due to our uncertain tax regime in the past.”

“But they will operate under stricter terms. That is the spirit of President Duterte’s pronouncement earlier this year, and that is also the spirit of my proposal which I proposed as early as October 2019, way before the pandemic,” Salceda added.

“As long as they pay the right taxes and comply with all our laws, they will be able to operate,” Salceda said.

Salceda said that after the SC TRO and the COVID-19 pandemic, the POGO industry shrunk by as much as as 50%.

Salceda expects the sector to begin recovering with the passage of a clearer tax regime, “plus the property sector will begin recovering as well, as POGOs are a key part of office occupancy in Metro Manila.”

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