Philippines President Rodrigo Duterte has just officially signed a new controversial tax scheme into law and it concerns all Philippine offshore gaming operators (POGO). Today, Malacañang Palace announced that Duterte has enacted the Republic Act 11590 as a part of the efforts of the nation to boost its revenue, which the nation sees as one of the ways to combat the negative financial impact implied by COVID-19. According to the measures, around 80% of the tax that is collected from gambling operators will be directed towards health measures. This comes shortly after the president of the country switched stances on the gambling industry.
The Taxes Under The New Law, Explained
With the new Republic Act 11590, signed by President Duterte, all POGOs will be required to pay a 5% tax on their gross gaming revenue (GGR), and workers at the establishments that earn $11,900 (Php600,000) or higher will have to pay a withholding tax of 25%. Additionally, a minimum withholding tax of $250 (Php12,500) will be charged to POGO workers as a measure to prevent wrongly directed salaries. All workers must have tax identification numbers in order for the government to charge the fees.
According to the law, all service providers and offshore operators that are licensed will have to submit an original copy of the notarized employment contract, in which the annual salary, as well as other benefits of the employee, are stated clearly. These documents need to be submitted to the Bureau of Internal Revenue.
POGO service providers that are accredited. In other words, providers that have a POGO license will not have to pay any gaming taxes, but they will be subject to applicable national and local taxes. Levies, fees and franchise taxes will be replaced by the imposition of the 5% gaming tax on POGOs.
Harry Roque, a presidential spokesman, stated today that 60% of the tax revenue that is collected with the new tax scheme will be used to implement the Universal Health Care Act. The other 40% will be split among two other programs – 20% will go to health facility enhancements and 20% will be used to achieve the National Economic and Development Authority’s Sustainable Development Goals.
This law on taxation is not something new. It first saw light last year, but after heavy opposition by the POGOs, the Supreme Court of the Philippines applied a temporary restraining order, thus delaying it. However, that turned out not to be a permanent solution, as President Duterte has just signed it again.
POGOs oppose the new tax, as they claim that it will negatively influence their revenue. Supporters claim that the tax revenue will be used for good things, including improving healthcare.