The Philippines still hasn’t been able to start its recovery from COVID-19, with cases still emerging that are hindering the relaxation of health restrictions. Metro Manila is still under modified quarantine, and will be until the middle of the month, which means casino revenue will still be under expectations. The biggest benefit can be offered by the online gaming segment, but only if the right infrastructure is in place. That’s why, according to Bloomberg, Philippines President Rodrigo Duterte is urging lawmakers to pass a bill that would establish tax rates for online casinos.
POGOs to Help The Philippines Recover
Duterte, whose “urges” are often expected to be taken as more than just subtle hints, has asked lawmakers to quickly make progress on a taxation bill that covers online casinos, including Philippine Offshore Gaming Operators (POGO). Duterte hasn’t always been a fan of online gaming, or even land-based casinos, but realizes the economic potential of the segment in helping the country begin to recover from the COVID-19 pandemic. A statement by his spokesperson, Harry Roque, from yesterday, urges lawmakers to take action so that the government can “generate the much-needed revenues in the country,” while providing greater government oversight of online gaming activity.
Should the legislation be approved as-is, POGOs would have to give up 5% of their gross gaming revenue (GGR) to the country. In addition, any foreign employees working for online casinos would be hit hard in the wallet, expected, along with their service providers, to pay an income tax of 25% of their salary (a stipulation adds that the minimum tax payment would be 12,500 Philippine pesos, or around $261). Absent the new tax, chances of controlling an ever-increasing budget deficit are less than optimistic.
Continued COVID-19 Trouble In the Philippines
Despite being under modified quarantine, Metro Manila has been trying to have some semblance of normalcy. There are four casino resorts that are operating under strict capacity regulations and restaurants are limited, as well. Indoor seating is limited to 25% capacity; outdoor seating to 50%. In addition to the restrictions placed on commercial activity, there is also a restriction on inbound travel to the country.
Whether the new tax will have its desired effect remains to be seen, but history doesn’t support the idea. Lawmakers had previously implemented a 5% “franchise tax” on POGOs, which didn’t go over well with operators. They began leaving the country en masse, and it took a Supreme Court order freezing the tax to stop the departures. Implementing a 5% tax on GGR and a 25% tax on income might not result in the Philippines receiving more tax revenue but, instead, less.