Salceda comment confirming Velasco House to adopt POGO tax regime on session day after SONA

July 23rd, 2021

Secretary Dominguez is correct. The House leadership, at my recommendation, will adopt the POGO tax regime approved by the Senate. That version contains only minor reworkings of the House version, and there is no difference between their tax rates and tax bases, and those of the House version. We were the first draft, and they made very few modifications. So, recognizing the respect that the Senate extended to the House version, we will adopt their changes, which in my view are acceptable.

I am very thankful that President Duterte certified this bill as urgent and for the DOF’s support. I personally wrote this bill to ensure that we get the proper taxes from POGOs, and that they are properly monitored and regulated.

The major changes are

1. The Senate version requires every alien employee of offshore gaming licensees (OGL) commonly known as POGO to have a Tax Identification Number (TIN) and imposes a P20,000 fine on the OGL for every alien employee without a TIN;
2. The Senate version removes the provision that POGOs currently registered with other special economic zones will pay at their current tax rate or 5% of gross gaming revenues, whichever is higher, and instead makes the 5% rate uniform. This is of little consequence.
3. The Senate version prevents the Aurora Pacific Economic Zone and Freeport from issuing new POGOs licenses and transfers POGOs currently registered under the zone to the regulatory ambit of the Philippine Amusement and Gaming Corporation.
4. The Senate version does not specifically provide that the income reported by POGO employees for tax purposes can be used as a basis for the computation of other mandatory contributions. We would have preferred that they keep this, but anyway, no one stops the other government corporations from using the presumptive income under the POGO tax regime as their basis for computing mandatory contributions.
5. The taxable period for the Senate version, for both POGO taxes and employee taxes, is monthly. In the House version, the remittances of taxes for POGO employees is on a quarterly basis and in advance, with a refund mechanism if taxes paid exceed tax dues for actual period of service rendered by employees. Meanwhile, the taxable period for POGOs in the House version is annual, as in the case of other corporations. We are amenable to the monthly system.

POGO taxes will raise P13.4 billion in its first year, and P176.9 billion in five years. Both versions impose a 5% tax on gross gaming receipts for “offshore gaming licensees” and a 25% tax on gross income for nonresident aliens working under the Service Providers of these licensees.

For POGO employees we will impose 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. The Senate version slightly differs in style, imposing a minimum monthly tax of P12,500, which would have the same revenue consequence.

Non-gaming income and service providers will be taxed at regular corporate income tax rates.

On top of the tax provisions, we also instituted stringent measures to monitor their personnel, supervise their operations, and punish them for violations of the law. By making POGO taxes a part of the Tax Code, they become subject to all the applicable penalties in the Code, including tax evasion.