Gatchalian questions P1.9-B in undeclared taxes from licensed POGOs
MANILA, Philippines — Philippine Overseas Gaming Operators or POGOs have underdeclared tax payments to the government, a lawmaker said Wednesday, pointing to discrepancies between gross gaming revenues submitted to the Bureau of Internal Revenue and the Philippine Amusement and Gaming Corporation.
In a statement sent to reporters, Sen. Sherwin Gatchalian cited research from his office which found estimated tax leakages of P1.9 billion due to the discrepancy of gross gaming revenue as reported by the BIR and PAGCOR from POGOs from January to August this year.
Gatchalian, chairman of the Senate ways and means committee, said that the government could have collected more taxes and fees from legitimate POGOs “had they been more honest in their transactions with the BIR and PAGCOR.”
“It’s regrettable that even legitimate POGOS are remiss in the payment of correct taxes. This is exactly the reason a tax regime for POGOs was put in place which is to reduce uncollected taxes due the government. It is lamentable that even licensed POGOs continue to disregard accurate payment of taxes,” Gatchalian said.
“Research shows that we are not realizing the full benefits of allowing POGO operations in the country. It’s high time we consider developing other industries that are sustainable, high-yielding, and long-term businesses.”
The senator added that indicative gross gaming revenue from January to August this year, based on 5 percent gaming tax payments made to the BIR by POGO operators, totaled P28.4 billion.
However, the two-percent regulatory fee payments to PAGCOR show indicative gross gaming revenue for the same period at P66.67 billion. PAGCOR’s account receivables from POGOs over the same period were estimated at P2.3 billion.
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Gatchalian said that foregone revenues from POGO operators could have been used to enhance the country’s healthcare system as the country continues to battle the COVID-19 pandemic.
Under Republic Act No. 11590 or the Act Taxing POGOs, 60 percent of revenues collected from the gaming tax on POGO licensees are to be allocated for the implementation of Universal Healthcare, the Health Facilities Enhancement Program, and Sustainable Development Goals.
At a separate hearing on the National Expenditure Program, Finance Secretary Benjamin Diokno said that the impact of discontinuing POGOs would not be major after revenues in 2021 reached only P3.9 billion, just a little over half the P7.2 billion that the industry generated at its peak earlier on.
"Let’s discontinue the POGO because of the social cost of the POGO. In fact si China has discontinued si POGO. Even Cambodia has…It also has a reputational risk, because people will ask, why are they going to the Philippines?” Diokno said.
“Discontinue na sa China, discontinue ng Cambodia. Why are they going to the Philippines? Maybe because we are loose, we’re not strict on our rules, so meron tayong reputational risk,” he added.
Assistance for displaced POGO workers urged
As it stands, the continued operations of POGOs in the country have the Marcos Jr administration and its allies in Congress up in arms. Lawmakers have mounted probes on the sector’s economic significance and its involvement in the kidnappings of foreign nationals and the recent spate of street crime.
The number of accredited service providers of licensed POGOs has sharply decreased between 2019 to 2022. Per data from PAGCOR, there are 123 accredited service providers of POGOs after its peak of 231 pre-pandemic. An estimated 22,000 Filipinos are currently employed by POGO operators in the country.
Gatchalian in a separate statement added that there is a need to come up with a meaningful and detailed program for them including the retooling and upskilling of their skills.
The Department of Labor and Employment has said it is looking at how it can assist Filipino POGO workers who might lose their jobs should POGOs get banned in the country.
“While we do not expect an abrupt displacement of POGO workers, it is important that immediate assistance or intervention is readily available for these Filipino workers to find replacement jobs as soon as possible,” Gatchalian said.
The senator suggested putting together a mechanism that would ”directly engage displaced POGO workers with other industries such as the Business Process Outsourcing sector.”
Gatchalian said that the local BPO industry, which has been in the country for the past two decades, currently employs around 1.5 million Filipinos and posts an annual growth rate of 8 percent. The industry is expected to post a higher growth of 10% in the next 5 to 10 years, which means more jobs for Filipinos.
He also pointed out that the majority of those currently employed by POGOs are skilled workers such as those working in customer relations, strategic support providers, IT support providers, and gaming software platform providers, among others.
“It can be gleaned from available data that BPO is a growing industry, and we can encourage our people to pursue employment in this industry. By comparison, the POGO industry is declining even after we have put in place a tax regime that legalized their operations. It is obvious the POGO industry is not worth pursuing as a sustainable industry in terms of providing employment to our people,” Gatchalian said.
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