Bill seeking to impose clear tax rates for POGOs pushed in Senate
Robie de Guzman • February 11, 2020 • 676
MANILA, Philippines – Senate President Pro-Tempore Ralph Recto on Tuesday said he has filed a bill seeking to impose a 30 percent income tax and five percent franchise tax on Philippine offshore online gaming operations (POGOs).
In a statement, Recto said he recently filed Senate Bill No. 1295 proposing the establishment of a tax regime for POGOs which are duly licensed and authorized by the Philippine Amusement and Gaming Corporation (PAGCOR).
Despite the fact that POGO is a growing industry in the Philippines, the lawmaker said the nature of its business activity creates confusion in the enforcement of the country’s existing laws.
Recto said that under PAGCOR rules and regulations on POGO operations, licenses are issued to Filipino-based or foreign-based operators. Service providers that form part of the components of the POGO operations such as gaming software provider, business outsourcing provider and content streaming provider are likewise required to secure a license.
“Both Philippine-based and foreign-based POGO operators are taxable on their income from gaming operations and other related services,” he said.
“Establishing the tax regime of POGOs and incorporating the same in the National Internal Revenue Code (NIRC) of 1997, as amended, is necessary to remove any doubt and avoid the confusion as to whether or not POGOs are taxable in our jurisdiction,” he added.
Under the bill, licensed Philippine-based POGOs, local gaming agents and service providers shall be subjected to a 30-percent income tax, the taxable amount will be derived in the preceding taxable year from all sources within and outside of the Philippines.
Foreign-based POGOs shall also be subjected to a 30-percent income tax based on their gross income derived from game offerings or facilities located within the Philippines.
On top of the 30-percent income tax, Recto’s bill also proposed the imposition of a five-percent franchise tax on all gross receipts derived from gaming operations of both Philippine and foreign-based POGO operators.
The proposal is pending before the Senate ways and means committee.
MANILA, Philippines – Senate President Pro Tempore Ralph Recto has urged the government to relax its restrictions on public transportation to serve commuters during the community quarantine.
“You want to restart the economy? Then let PUVs (public utility vehicles) restart their engines,” he said in a statement on Monday.
“There are three important T’s today: tests, trabaho, transportasyon. Screening for coronavirus is no longer a requisite for returning to work. But without a ride, there is no work. And no work, no pay,” he added.
Recto issued the statement a week after a general community quarantine (GCQ) took effect in Metro Manila which allowed more businesses to reopen and more employees to return to their work.
Public transportation operations were also allowed but only with limited routes and capacity to observe physical distancing and other health measures.
“Allowing workplaces to open without providing the people with the means to go there is like telling the President he can now cross the Pasig River from his residence to his office for as long he does not ride any boats,” he said.
“That, today, is the sink-or-swim situation for the nation’s breadwinners,” he added.
Recto appealed to the government to ease the “brutal” lack of transportation by allowing husband-and-wife to ride a motorcycle in tandem.
“If they share the same bed at night, why can’t they ride a bike together during the day?” he asked.
He also believes that jeepney and UV drivers should be allowed to ply the roads again, subject to health conditions, and called on the government to partly subsidize the seats they are compelled to keep vacant since they are only allowed to operate under reduced capacity.
“And more buses, please, for they are the tickets out of temporary unemployment,” he said.
Recto also said that the establishment of safe bike lanes and mass distribution of bicycles to workers should also be accelerated.
“The Senate-approved bill reauthorizing the Bayanihan Act earmarks P17 billion for bike lanes, sidewalks, bicycles and other things which form the foundation of a national bicycle infrastructure. That amount includes test runs for a “service contracting scheme” for PUVs,” he said.
Other senators have also called on the Department of Transportation (DOTr) to open more bus routes to alleviate the travel woes of commuters.
The DOTr earlier said it has opened 15 rationalized bus routes in Metro Manila and nearby areas. This is half of the 31 routes that the Land Transportation Franchising and Regulatory Board planned to open amid the quarantine from the previous 96 routes covering 4,600 buses.
The DOTr also appealed for public understanding as it plans to resume public transport gradually and in two phases to prevent the possible second wave of COVID-19 infections.
MANILA, Philippines – Opposition Senators Francis Pangilinan and Risa Hontiveros are calling on their fellow lawmakers to conduct an inquiry in aid of legislation into the alleged lobbying of the Philippine Amusement and Gaming Corporation (PAGCOR) to exclude Philippine Offshore Gaming Operators (POGO) in the COVID-19 quarantine.
In a joint statement, Pangilinan and Hontiveros said they have recently filed Senate Resolution 396 after PAGCOR allowed POGOs to resume partial operations, subject to strict conditions, purportedly to boost government revenues amid the COVID-19 pandemic.
The senators said that the gaming regulator’s “actuations in lobbying for an exception in favor of the POGO industry threaten to unduly put the health and well-being of the Filipino people at risk by undermining the enhanced community quarantine (ECQ).”
“Even going by the official estimate, allowing more than 50,000 workers in the online gambling industry to return to work represents a substantial exception to the ECQ rules,” they said.
PAGCOR chairman Andrea Domingo earlier argued that licensed POGOs should be allowed to resume operations as these are part of the Business Process Outsourcing (BPO) sector.
BPOs have been allowed to operate amid the quarantine period.
Domingo earlier assured that before POGOs were allowed to resume partial operations, they would have to meet safety and health requirements.
But Pangilinan and Hontiveros both expressed apprehension that the partial reopening of POGO operations could “reverse the efforts put in place to stem the spread of COVID-19”as there is no assurance that POGOS will follow the Department of Health’s guidelines on physical distancing, wearing of masks, and frequent handwashing and sanitation.”
The IT and Business Process Association of the Philippines (IBPAP) have also rejected that POGOs are part of the BPO industry, citing four key differences:
BPO companies are registered with the Philippine Economic Zone Authority (PEZA) or the Board of Investments, while POGOs are registered with PAGCOR,
the offshoring nature of POGOs are allegedly because they are unable to practice their betting or gambling functions in their respective shores,
IT-enabled jobs BPO companies create are of much higher value, requiring a range of technical, domain, and soft skills, and
BPOs come to the Philippines to leverage off the country’s human capital, like strong English and technical skills, customer service orientation, malasakit, and ability to adapt to foreign cultures. On the other hand, majority of POGO staffing comes from foreign labor brought into the country to support their operations.
According to IBPAP, POGOs are not part of the annual IT-BPO Headcount and Revenue report, which in 2019 ended with 1.3 million direct employees and $26.3 billion in revenues, the senators said.
PAGCOR also argued that revenues from POGO operations can be a significant source of funds for the government’s COVID-19 response.
It also said that operators are ordered to pay all tax obligations up to March 2020 before they will be allowed to resume operations and only registered workers cleared in COVID-19 rapid tests to report back to work.
But Hontiveros and Pangilinan pointed out that during a Senate hearing in February 2020,
the Bureau of Internal Revenue revealed that POGOs failed to pay the government an estimated P50 billion in withholding and franchise taxes in 2019.
The senators said the uncollected taxes of POGOs could be a source of additional government funds for COVID-19 response.
“[But these] taxes need to be collected regardless of the industry’s status of operations during the community quarantine,” they said.
The senators also pointed out that the resumption of POGO operations will have minimal impact on the country’s economy.
They cited records from the Anti-Money Laundering Council (AMLC) showing that the industry only accounts for 0.04% of the domestic economy.
Earlier this week, a group of House lawmakers filed a bill seeking to have POGOs declared illegal by prohibiting the operations of any offshore gaming by any means or device within Philippine territory.
MANILA, Philippines — The national government has recently allowed partial resumption of operations for Philippine Offshore Gaming Operators (POGO) in the country despite the prevailing enhanced community quarantine (ECQ) against the spread of the coronavirus disease (COVID-19).
Malacañang has been accused of favoritism over its decision but Presidential Spokesperson Secretary Harry Roque said the business process outsourcing (BPO) sector has long been allowed to partially operate and that covers the POGO industry.
He added that the decision as to which industry will be allowed partial opening depends on the Bureau of Internal Revenue (BIR) and the Philippine Amusement Gaming Corporation (PAGCOR) especially when POGOs do not have liabilities such as tax issues to settle.
“Wala pong favoritism diyan, [There is no favoritism here,]” Roque said.
“On the contrary, the equal protection clause that provides that all those similarly situated must be treated alike so dahil isang klase ng BPO ang POGO, kinakailangan mapabuksan din sila [and so, since POGO is a type of BPO, they should be allowed to open] be it ECQ or GCQ,” he added.
But the IT and Business Process Association of the Philippines (IBPAP) countered this claim, saying POGOs cannot be considered as part of the BPO sector.
“The IT and Business Process Association of the Philippines (IBPAP) would like to have it clarified that as far as the IT-BPM industry is concerned, Philippine Offshore Gaming Operators or POGOs, as they are commonly called, cannot be considered as Business Process Outsourcing (BPO),” said IBPAP president and CEO Rey Untal on Saturday..
Untal said though BPOs and POGOs may have similarity in the nature of operation which is offshore, he said POGOs primarily do so because they are unable to practice their gambling functions in their own shores.
“BPOs come to the Philippines to leverage off our human capital, i.e. our strong English and technical skills, customer service orientation, malasakit, and ability to adapt to foreign cultures,” Untal said.
“This, in turn, has directly benefited millions of Filipinos by providing them with better employment opportunities throughout the years,” he added.
IBPAP also stressed that BPO operations are regulated by the Philippine Economic Zone Authority (PEZA) while POGOs are only monitored by PAGCOR.
Senator Ronald Dela Rosa, for his part, expressed support for the resumption of POGOs as they are deemed essential as a source of additional funding to support the national government response amid the COVID-19 crisis. MNP (with reports from Rosalie Coz)
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