June 3rd, 2021
Salceda elated by Senate passage of POGO tax; says House ready to adopt if safeguards against tax evasion, reporting standards “adequate”
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the House of Representatives is willing to concur with the Senate’s version on the fiscal regime for Philippine Offshore Gaming Operations (POGO) “as long as the reporting standards and the measures against abuse are adequate and robust.”
The Senate passed the SBN 2232, the counterpart version of House Bill No. 5777 which Salceda principally sponsored, on 2nd and 3rd reading June 2, following a certification of urgency signed by President Duterte.
“We are just waiting for the Senate to transmit the proposal, really. Tentatively, I am personally amenable to the committee report that we saw prior to the floor deliberations. I think we will move for adoption of the Senate version, since it is almost just the House version anyway. But, we will wait for the final version just to be sure,” Salceda said.
“The sooner we can pass a fiscal regime for this industry, the better. While the tax laws are unclear, there is plenty of room for abuse and discretion. We need to make things clear soon,” Salceda added.
Under the version of the House which was passed in February, POGOs will be subject to a 5% tax on gross gaming receipts. Their service providers will be subject to regular taxes. Non-resident employees of both will be subject to a withholding tax of 25% of gross income, with a presumed income of P600,000.
The Senate version adopted these rates in its Committee Report.
“There is very little difference between the House and the Senate version since, like the Estate Tax Amnesty earlier, the Senate Committee on Ways and Means saw little need to repeat the extensive hearings and study we have conducted in the House. So, the bill is almost identical to that of the House,” Salceda said.
Stronger safeguards
Salceda’s proposed language, which the Senate adopted, also establishes a system of exchange of information between the Department of Labor and Employment (DOLE), the Bureau of Immigration (BI), and the Bureau of Internal Revenue (BIR) to ensure compliance with all laws, including taxes.
Alien employees will be taxed regardless of residency or working visa status. POGOs are also considered “doing business in the Philippines,” which Salceda says will allow all Philippine laws to be applicable to them.
“We can regulate them as tightly as we are allowed by our laws to, because the initial confusion about whether POGOs can be taxed is promptly ended. The Office of the Solicitor General opined then that they are offshore business and hence cannot be taxed. That was because the law was ambiguous. I made sure to spell it out in the law that for all legal and tax intents and purposes, they are doing business here. It precludes any of the legal acrobatics,” Salceda added.
The Philippine Amusement and Gaming Corporation (PAGCOR) and special economic zones are also authorized to charge 2% of gross gaming receipts as regulatory fee.
Salceda said the government may generate P121.9 billion revenue from the measure over the next four years.
“We can regulate this industry better by taxing it and keeping a close eye on its practices. This bill is a clear win. I thank President Duterte for seeing the merits of the bill, and now both Houses have their versions passed on 3rd reading,” Salceda added.