By V. A. C. Ferreras, October 1 2019; Business World

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AS PART of an overall government bid to better track Philippine offshore gaming operators (POGO), the House of Representatives Ways and Means committee is drafting a bill that aims to make it easier to collect taxes from the sector.

“… [T]he House Ways and Means committee has been studying the POGO situation… given the systemic risk it poses to the Philippine economy, in particular to the real property sector and the banking sector…” Albay 2nd District Rep. Jose Ma. Clemente S. Salceda, committee chairman, told reporters on Monday.

The committee, however, will focus immediately on taxing the industry more effectively.

“The difficulty with POGOs, unang una, karamihan ng (first of all, most of the) funds transfer are essentially through digital, so it is difficult to monitor their revenues,” said Mr. Salceda.

Sa corporate income tax, sa business taxes, they are only paying P300 million. So kasi ang hirap hirap niyan i-monitor, pero madali i-monitor ’yung seats (it is really difficult to monitor, using the current scheme, how much tax they pay, but it will be easier to monitor taxation if based on seats).”

Hence, Mr. Salceda said, the bill could impose a “presumptive corporate income tax” of $1,000 per seat, adding that the Bureau of Internal Revenue (BIR) could collect about P76 billion a year from POGO taxes.

The government collected about P289 million in franchise fees from the sector last year, Mr. Salceda noted, but its revenues totalled an estimated $20 billion.

Mr. Salceda also said he has asked the Bangko Sentral ng Pilipinas (BSP) and the Philippine Statistics Authority (PSA) to include POGO sales under service exports in order to help monitor the sector. “I formally asked the BSP governor (Benjamin E. Diokno) to include it as a separate item in the BoP (balance of payments) account under service exports. Sa NEDA (National Economic and Development Authority), dun sa PSA, I requested (National Statistician) Dennis (S.) Mapa, on the AIS — which is the supply side: agriculture, industry, and, services — to have a separate line under services for POGOs. So we can control the risk,” he said. “This is in a way of legitimizing POGO creation — not just the grant of franchise of PAGCOR (Philippine Amusement and Gaming Corp.). Just like vape, nung tinax natin naging legitimate sila (it became legitimate when we taxed it).”

The Finance department has led an effort to form an interagency database of POGO foreign workers, based on information from Department of Labor and Employment, Department of Justice, Bureau of Immigration, Department of Foreign Affairs, Professional Regulation Commission, the National Intelligence Coordinating Agency and the BIR, among others.

POGOs must also now present BIR registration if their licenses are to be renewed by PAGCOR.

As of mid-August, PAGCOR said it had given licenses to 58 POGOs employing about 138,000 foreigners, with three more outfits awaiting approval at that time. The regulator capped the total at 61 and has since imposed a moratorium on new applicants.

In pressing POGOs to withhold personal income taxes, especially of their foreign workers, and remit such collections promptly to the government, the BIR collected some P1.4 billion from the sector as of August, more than double the P579 million last year and the P175 million in 2017.

The Finance department had estimated that the government loses P24 billion annually in foregone personal income taxes for every 100,000 unregistered POGO workers.

The government late last week made an example of the first “tax-dodging POGO” to fall under this campaign, shuttering the Great Empire Gaming and Amusement Corp.’s offices in Subic Freeport in Central Luzon, in Quezon City and in Aseana City in Parañaque City after finding out that the company was not registered for value added tax. The BIR said the company has around 8,100 foreign workers in ins Eastwood facility and “a few hundred more in Parañaque and Subic.” — V. A. C. Ferreras