Government to start crackdown on delinquent POGOs

MANILA, Philippines — Government authorities will shut down the operations of offshore gaming firms and their service providers who refuse to pay withholding taxes to the Bureau of Internal Revenue (BIR), according to the Department of Finance.

In a text message to reporters, Finance Secretary Carlos Dominguez said the government is planning to set in motion a crackdown against Philippine offshore gaming operators (POGO) who fail to withhold and remit the taxes of their employees.

 “Yes, (we will) close down organizations that don’t withhold and remit the proper amount (of) taxes from their employees,” Dominguez said.

The finance chief said the operations, which would start “as soon as possible,” would be conducted by the DOF and BIR, together with the Department of Labor and Employment (DOLE), Department of Justice (DOJ), Bureau of Immigration (BI), Office of the President (OP) and the Philippine Amusement and Gaming Corp. (PAGCOR).

In a separate statement, the DOF said Dominguez ordered the BIR to shut down delinquent firms and to file the appropriate charges against them upon learning of the BIR’s slow pace in collecting withholding taxes, despite the issuance of 130 letter notices to POGO firms with tax liabilities amounting to P21.62 billion. 

The DOF, citing a report from Internal Revenue Deputy Commissioner Arnel Guballa, said the BIR collected P1.4 billion in withholding taxes from POGOs from January to August, a 242 percent increase from the previous year’s level.

Dominguez also told the BIR to ensure the payment of the tax liabilities accounts for each foreign worker and to reject any “lump sum”  offer or any other arrangement in paying their tax arrears.

The government is intensifying its efforts in monitoring foreign workers to ensure that they are paying the correct taxes.

As part of its efforts, the government issued a Joint Memorandum Circular, which requires all foreign nationals and their employers or withholding agents to secure a Tax Identification Number from the BIR.

The BIR is also working with the DOLE in developing a database of foreign nationals working in the country to effectively monitor them and ensure that they pay the correct amount of taxes to the government.

Since July this year, the BIR has started the issuance of TINs to foreign POGO employees to jumpstart the collection of withholding taxes from them.

As a result of these measures, the DOF estimates that the government would be able to generate about P2 billion in additional revenues a month from the withholding taxes of some 138,000 foreign workers in the POGO sector.

Internal Revenue Commissioner Caesar Dulay earlier said that the BIR would shut down offshore gaming companies who continue to fail to comply with the law and are unable pay the correct taxes.

Dulay said the bureau is also going after offshore gaming firms who are unregistered with the Philippine Amusement and Gaming Corp. (PAGCOR).

The PAGCOR, for its part, earlier said it will impose a moratorium on the issuance of licenses to offshore gaming firms seeking entry in the Philippines, until such time it addresses all issues plaguing the industry.

It is also planning to issue gaming employees license (GEL) to employees of offshore gaming operators.