Philippine Government Considers Levying an Extra 5% Tax on Gaming Operators

• Philippine lawmaker, Joey Salceda, introduces additional 5% tax on gambling operators
• The government has shown support through the Department of Finance
• New taxes come after the Chinese government urged the Philippines to ban all forms of online gambling

The Philippine government intends on imposing new tax rates on gambling operators as it cracks down on establishments involved in tax evasion.

Proposed 5% Additional Tax for Gaming Operators

Philippines Offshore Gaming Operators (POGO) are staring at an impending 5% additional tax on all gross revenue, not to mention increased licensing fees.

This is after Joey Salceda, a member of the House of Representatives, tabled a bill earlier this month that intends to classify all POGOs as resident corporations rather than PAGCOR-accredited service providers. This means POGOs will be taxable entities, thereby subjecting them to the extra taxes.

PAGCOR is the Philippine Amusement and Gaming Corporation tasked with regulating both offshore and land-based gaming. The regulatory body has shown support for the bill with its boss, Andrea Domingo, agreeing that the bill was ‘a good idea’

The New Tax Rates

According to Salcedo’s bill, gaming operators will be required to pay $10,000 in monthly tax for all table games along with another $5,000 monthly fee on all RNG-based games including slot machines. That’s not all. The lawmaker proposed a further $1,000 presumptive corporate income tax.

PAGCOR’s chief added that the regulator already had a new formula that would be used to calculate the minimum guarantee fee (MGF) that would likely push the regulator’s fee revenue to twice the current MGF rate.

According to the Philippines Bureau of Internal Revenue, the taxman was able to collect PHP 1.63 billion ($32 million) from POGOs for the period between January and August 2019 – an increase from 2018 when it collected PHP 579 million. There are 218 official POGOs in the country with 108,914 foreign employees.

The Philippine government has also pledged support for the bill through the Department of Finance with Carlos Dominguez, the Finance Secretary, saying that he believes it’s a good move. This is despite him noting that POGOs were already subjected to an existing 5% franchise tax.

The existing taxes are already causing problems in the POGO industry with multiple establishments shut down for failing to remit taxes. The government says it will only allow them back in business after agreeing to commit to a payment plan.

Philippine Government Under External Pressure

This new increase comes in the wake of intense pressure from the Chinese government that has accused gaming sites based in the Philippines for illegally targeting its citizens. In fact, PAGCOR received a letter from the Chinese Embassy that later saw President Duterte of the Philippines issue directives that would ensure illegal operators are punished for accepting Chinese customers.

In the letter, the Chinese Embassy said that China’s interests were severely hampered by the illegal operators in the Philippines. As a result of the directive issued by President Duterte, the Immigration Bureau reigned in on 8 POGO businesses believed to have been operating illegally in Puerto Princesa. A total of 324 Chinese nationals were arrested in the operation that was carried out last month.

PAGCOR said in August that it stopped processing new applications for POGO licenses, citing fresh concerns over the growing gambling industry in the country. Currently, the House Ways and Means Committee chaired by Joey Salcedo is scrutinizing the bill and will table its report.