May 27th, 2021
Salceda says POGO tax enactment looming, as Senate to take up tax measure in plenary next week
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says that the Fiscal Regime for Philippine Offshore Gaming Operators (POGOs) under House Bill No. 5777, and its counterpart version in the Senate, Senate Bill No. 2232, will likely be passed on second reading next week by the Senate, leading to its enactment into law “probably by August at the latest.”
The Senate has already allowed its version to enter the period of sponsorship on May 25, 2021. The Senate is expected to tackle the bill for interpellations and amendment next week.
“The Senate Committee Report had very minor modifications compared with the House bill we approved. We fleshed all issues out, and in fact, the House bill has very strong tax enforcement provisions. So, I think the Senate will discuss it very quickly,” Salceda said.
Salceda adds that “if the measure is certified as urgent, as it is a priority of the Legislative Executive Development Advisory Council or LEDAC, then they could even finish it next week.”
“In any event we are ready for bicam if there are major differences, and no bicam if the bills are similar in essence,” Salceda added.
“The Department of Finance is also supportive of this measure. It will help us catch POGO tax evaders, give clarity to law-abiding ones, and generate additional revenues for COVID-19 measures,” Salceda said.
Stronger POGO tax measures
Under Salceda’s proposal, which the House approved on third reading this February, POGOs will be subject to a 5% tax on gross gaming receipts. Their service providers will be subject to regular taxes. Meanwhile, nonresident employees of both will be subject to a withholding tax of 25% of gross income, with a presumed income of P600,000.
To ensure that POGOs are fully taxable in the country, Salceda’s proposal explicitly declares them to be “doing business in the Philippines.”
Salceda’s proposal also enforces stronger checks against evasion and abuse. The proposal taxes non-residents regardless of term of contract or status of visa. It also establishes a system of exchange of information between the Department of Labor and Employment, the Bureau of Immigration, and the Bureau of Internal Revenue to ensure compliance with all laws, including taxes.
Under Salceda’s proposal, the Philippine Amusement and Gaming Corporation (PAGCOR) and special economic zones will also be able to charge 2% of gross gaming receipts as regulatory fee.
Salceda says that he estimates the total revenue intake to the National Government to be P121.9 billion over the next four years, which he describes as more conservative, compared with the around P48 billion 2021 revenues “that the tax agencies estimate we can generate.”
“Whether you take my conservative estimates considering COVID-19, or the more optimistic estimate, clearly this is money we could use very well to fund COVID-19 assistance,” Salceda said.