Philippines Report

POGO tax collection may reach P76 billion

POGO tax collection may reach P76 billion

THE FINANCE department is projecting tax collections from Philippine Offshore Gaming Operators (POGOs) to reach P76.2 billion from 2022 to 2023, once new taxes take effect starting next year.

Department of Finance (DoF) Secretary Carlos G. Dominguez III at a virtual briefing on Friday said P35.1 billion could be generated from the 5% tax on gross gaming revenues, followed by P41.2 billion from the 25% withholding tax from the gross income of foreign employees.

Republic Act No. 11590 subjects offshore gaming licensees to 5% tax on gross gaming revenues. Foreign individuals employed by a POGO or its service provider must also pay 25% withholding tax on gross income.

The nongaming revenues of Philippine-based POGOs are subject to 25% regular income tax.

“Those are projections, and they will depend on how much money is going to be coming from the major source of the gambling,” Mr. Dominguez said.

Tax collections from POGOs stood at P2.38 billion in 2018, P6.4 billion in 2019 and P7.18 billion in 2020, according to DoF.

Collections reached P2.05 billion from January to July this year.

China has been cracking down on online gambling, dampening the outflow of gambling money from the country, Mr. Dominguez said.

“Once the Chinese start cracking down on that, of course the business will go down here. It’s not people going out because of our tax regime here. It’s because the source of the market is drying up.”

China has been investigating and shutting down thousands of online gambling platforms and illegal payment platforms.

A POGO exodus amid the coronavirus pandemic hurt demand for office spaces in the Philippine capital last year. An improvement in office space demand from outsourcing firms this year probably will not be enough to offset POGO losses, real estate service firms said.

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