Proposed 5% franchise tax on Pogos gets DOF support

THE proposed imposition of an additional 5-percent franchise tax on revenues generated by Philippine Offshore Gaming Operators (Pogos) has gained support from the Department of Finance (DOF).

The proposal was earlier submitted by Rep. Jose Ma. Clemente S. Salceda, chairman of the House Ways and Means Committee.

According to Finance Secretary Carlos G. Dominguez III, the DOF backed the proposal even if there’s an existing revenue rule that already subject Pogos to a 5-percent franchise tax on gross receipts.

“Yes, I have not seen the exact proposal but, in general, yes I think that is a good idea,” Dominguez was quoted in a statement as saying. “But they are already paying a fee; a fee for that.”

Revenue Memorandum Circular 102-2017 by the Bureau of Internal Revenue (BIR) subjects “the entire gross gaming receipts, earnings or the agreed or pre-determined minimum monthly revenues from gaming operations under existing rules, whichever is higher, …to a franchise tax of 5 percent in lieu of all kind of taxes, levies, fees or assessments of any kind, nature or description.”

But aside from the franchise tax, Salceda said he is also proposing a gaming tax of $10,000 a month per table for a live setup casino and a $5,000 a month gaming tax for random number generator-based games.

The proposal also aims to register Pogos as resident corporations as basis for taxability.

He also wants government to impose at least $1,000 presumptive corporate income tax per seat for Pogos.

The BIR has reported it has so far collected P1.63 billion in withholding taxes from Pogos and their service providers covering the period January to August.

These online gaming firms paid P175 million in withholding taxes in 2017 and P579 million in 2018.

BIR Deputy Commissioner Arnel SD. Guballa said the agency has so far listed 218 Pogos and their service providers with a total of 108,914 foreign workers.

The BIR earlier ordered the temporary closure of the operations of the Great Empire Gaming and Amusement Corp. (Gegac) on September 25 for its failure to pay the correct amount of taxes.

Gegac initially paid P250 million and issued an undertaking to settle remaining tax arrears of P1.050 billion in three separate monthly payments covered by postdated checks. After that, the BIR allowed Gegac to resume operations last September 27.