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Business Insight
Tuesday, November t9, 2OLg

Tax on POGOs sparks deb ate

BY AI{GELA CELIS
Tl ll.usr rLt , r .r rlc rr p, ,lie y or.
lcgrsl.LLL,,r l .'. sp.r l:Lil -L del,,rtc
,rrr,.r lLtdttr ut nLrt Ol)Ll.LLl(rl\ Lri
Phr r1lnc t,iishurc g., run; u1r.,,,
rors (P()(!Os) shorrld bc taxecl.
Fc)r thc DcpxrtDrcnt oI Fin,rnce
(Dt)I1, tirclc is rr,r :Lotbrguirt, es
f:rr ,rs Llrr. ilulc;rrr of tnrcrn,rl
ItcvcoLrc (t}litl is colccrncd dr.Lt
PC)Cl( )s elc covcr.eclby L)hLlippioe
t1L\ rcgLLI:ttitxts.
-i'he
L)( ,l (iLLrl.r BlllIL,rrr,run
tLrrr st.Ies tl ,tl LhL \iLUs ,)r pl.Lcc
'rl inl nre rs rvlrtr'c tht scrr.r..-r
rttc rcrrrlcr c.l.
Ctllos L)orriur:'ucz, l)OF sec
lcLar'1,,rold rcportcrs il e Vibet
It1L-\5-rlj! J c\rurJ-t). rhc primLLl
lurrsdrtLrr,n r,, irltcrp[iJt LLrc lrr
(iorlc plovisions lrcs ,,vidr rhc IJII{.
''Thc BIR issucd lLr Lrpirion to
tlrrs cJltcr ur rntlts ,rgu \.t)rns rlrir
tilc 5rtu., ,,f Ir, r,D)c is \vhurc tlrr
sctr.iccs ere rcnrlcrcd. Thus, since
POCOs lrc plovjdint servicts to
rhcir coulllcrp^rrs in-rlrc philip-
pincs. thcy uc srLbject to inconrc
tirx. l'hc srrLnc is truc lirr \rAT
(ve1uc adclcd tex), utich also is
lmposeci oo scrvices lendcrcci in
rhc irhrlippurcs," I)ornirigucz saicl.
Accolclilg to lJllt's rcvcnuc
r)rLrr.r'rnJLrrn c rcLrl,rr qRIlCl n,r.
102'2(ll-, l,( )a,i r L.r\lr,r\cr\.Lr!
clussilictl its Lhos,: clul1, liccrrsccl
PoGO wdrkers wait for their shuttie service in pasay City.
anci rurhorizccl b1' the Philippine
Amuscme nt rld G,rnrng Curp.
fPngcor) ro pror,idc ofisLruie
ganing ser.vices, rvl.rether these
upcrxtur5 mry bc Phrlrppine
Lrscll or uffshorE b,rsed, rvirh
the lltrer beJog rn errtcrprise
urg.rnized in .r fotcign countrv.
r.v1io rvill engage the services
of a Pagcor.-accreditcd servicc/
supporr provider for its online
gatning activitl'.
POGU rrr,prl crs in rhc phillp
prnes, .Ls pcr thc BIR,,J5o 1rrc[rJed
other entities, such as pOGO-
gaming agents, scr-vice proviclers,
and gamiog support pror,.iders,
Donioguez's message was in
rcspoAse to a report \l",1ich s2id
drat xccorcllngto the Ofilcc of rhe
Solicitor Gencral (OSG), POGOs
are not subject ro Philippine tax.
Andrea Domingo, Pagcor chair-
persoa, howcver said the OSG,s
opinion pr-cv,rils unless a clear
measure is passed into larv,
"In absencc of
any clear larv
covcring the texability of the
of the oflihore-based
inconic
POGO opcr':rtors, then the opin-
ioo of the OSG t'ou1cl be prevail
ing," Domingo said in e s.arernen!
to fcPorters.
"If congress passes a la*' clearly
plor.-iding for dre rar accountatrili-
ties of POGO operarors, then we
should abide by it as it is the iaw,"
she added.
Leu'mahcrs horvevcr, iiLe
Don-iinquez, seicl thcsc PC)GOs
should bc taxed.
Franklin Drilon, Scnere n nor
jq l dcr. rn I sretemcnr cstertJel,
1
drsputcd tbe upirion rcndcrcd
by rhc OSC, rvarning that such :r
"mrsplaced .rnd misgurled" oprn
ro11 Inil).".,pcn x cJLl ol $orms,'
in the counry's tlx systenr.
In rhe 6rst place, Drilon said,
itshould be the BIR which will
decidc un thc marter rnd sccondly.
POGOs lc clerrly rexlbl,: r: thuy
arc Operatil]g:in the country.
"Pursuarlt to thc N2tional lrr-
ternal Revenue Code, thc power
to inrelpret rhe provisions of this
Codc end other tax latvs shall L:e
under the exclurir.e and uricinel
jun:cLcooo of the comnrjs"ion.r,
subject to review by d-re sccretary
ot hnance," Drilon said.
"If that is rhe rheory (thxr
POGOs cannotbe taxed), how can
permaneody close r1le POGOs
u,'e
which were oldered cLrscd due tcr
See TA-t) PageA2

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non-Payment of uxes. second.
the employees of POGOs are
subject to taxation, but the
operatols ate exempted ftom
taxe s. Isn't it conflictine?.'
Drrlon said in Fihoino.
Under Sectron 4) of the Na
tional Revenue Code, Drilon
said rhe governmenr can derive
income from comDensation
fot labor or personal services
performed in the philiooines.
"POGOs provide a'service
and the service is completed
in rhe Philippines since ill the
berting occurs and is completed
in the Philippines,,' Drilon sajd.
"It is clear that the whole
activity is conducted in the
Philippines and, therefore. is
subject to the jurisdiction of
the Philippines, Because if vou
say otherwise, then pAGCbR
would have no authoritv over
them," he added,
Albay Rep. Joey Salceda also
bucked the position of the OSG
tbat POGOs ate not subiect
to Philippine taxes becausi its
income is from activities under-
taken abroad.
Salceda said that while the
bets are made by people outside
the Philippines,'.,it is enabled by
maopower and facilities inside
the Philippines.,,
"So, there is value-added ot
income derived here therefore
raxable. Basic accounting prin_
5267_imposing a five percent
crple -costs ate recognized- tlanchtse tax on pOGOs
wnen revenues are recognized. 25 percent
5o aren't the wages here costs salaries of foreign
expensed by POGOs,', he said. wlth
a mlnimum threshold of
Out of 60 POGOs in the
countties, only l0 are registered
with rhe BIR, the wivs rr,.l
means chair pointed oui.
"So, therefore should not the
50 registered and the 100 illeeal
POGOs be of similar staturi?
Mo reove r, OSG interpreta-
tron rises to the level of a tax
Qtj -
(a)
""TA)(
exemption, the grant of which
is intrinsically rhe dury of Con-
gress," Salceda said.
Meanwhile, the House com-
mittee on ways and
means
approved a bill which seeks
to impose additional taxes on
POGOs and its fore.ipn wotk-
ers, who are mostlv Ciinese- in
the counrry,
The panel chaired bv Sal_
ceda approved House Biil No.
and
income tax on the
employees
P600,000 annually.
"The exigent issue is paecot
merely charges rwo percent reg_
ulatory fee on POGOs inste;d
of five percent franchise tax
in lieu oT other taxes.,' Salcede
told reporters.
Salceda said the goveroment
collects some p6 t; p8 biuion
q for POGOs will proviJe ihe
Al
a yeaf from the two percent
tax, and rhe additional taxes
would allow the govelnment ro
collected P20 billion from the
franchise tax.
He said his bi.ll aims to collect a
total of P45 billion in additional
revenues for the government,
with Pagcor being the lead aqencl,
tasked to collect the tax€s.
Salceda, in the bill's explana-
tory note, said the taxabiliw of
POGOs should be determined
given theit proliferation in re-
ceot yeats.
"While the BIR has issued
RMC No. 102-2017 which clad-
lied the tax tleatment for these
facilities and associated services-
a law rhat setrles auestions of
taxabiliry through imendments
in the Nauonal Revenue Code.
will once and for all
address
confusion on the taxation of this
emergrng industry,,, he said.
"Codifying the rax regime
government a broader set of
levers wirh which ro moniror
.aod
ovelsee the industry and
to stabllrze the gyratlons lo rax
revenue intake and enfotce-
ment," he
^dded.
- With R,
Afica and W Vigilia