SOUTH EAST ASIA 36
philippines
Prices push POGO exodus While kidnappings and illegal immigration make for unwelcome headlines for the Philippines’ online gaming industry, what’s really driving recent departures from the country is the rising cost of doing business, especially during an economic downturn.
T
he Philippine Offshore Gaming business, with the government seen to be Operator licenses have been a getting greedy. With the huge volumes cash cow for the government since wagered through the POGOs, some elements they were introduced in 2016 in of government, including the tax department, response to newly elected President Rodrigo debate they are not getting their fair share. The Bureau of Internal Revenue wants Duterte’s call to clean up the industry. Anyone applying for the license needs the POGOs to pay a 5 percent franchise tax to pay $150,000 in processing fees for an on revenue, while they are also expected to e-casino and $200,000 for the license. The remit withholding taxes on salaries paid to company will have to pay $300,000 for a employees. The BIR had also insisted on the security bond and will need to renew the payment of back taxes as a requirement for license every three years for $150,000. The companies to restart operations after the lockdown, though it now figures are slightly lower for appears that it is easing sports betting operations. its stance in this area. The fee is then 2 As well as “If you compare the percent of gross gambling percentage/amount of the revenue that must be the taxes and PAGCOR POGO levies submitted to the Philippine fees, POGOs and these taxes with Amusement and Gambling other top-tier licensing Corp, which has a mandate operating in the jurisdictions, what is to submit 50 percent of country face being expected to be its income to nationpaid by online gaming building projects. other hidden operators and providers In 2019, revenue and rising in the Philippines is way from POGOs hit P5.73 above what they will billion ($115 million), up costs. pay if they are licensed from P73.72 million in elsewhere,” one leading 2016, the first full year of industry figure said, on operation. Accumulated revenue from licensing fees up until March condition of not being named. Another industry insider credited the this year has been P20.83 billion. In terms of taxes, the firms paid P14.28 billion in POGO license as being one of PAGCOR’s 2019, with P6.42 billion coming in the form best ideas, but also said the industry was now being unfairly squeezed for more. While of direct taxation. However, it doesn’t stop there and some Philippine-based workers should pay some POGOs are now voting with their feet. In form of income tax, it’s entirely unclear why recent months, three firms linked to SunCity POGOs should pay on their worldwide income, Group have left the country and in total especially as this was not the case when they about 11 are thought to have left, with more first applied for the license. “The senators/politicians who have reportedly eyeing the door. According to industry experts in the jumped on the anti POGO/Not paying tax Philippines, the issue is the cost of doing bandwagon are in essence either unaware of
“
”
Asia Gaming Briefings | August 2020
how much “officially” POGOS pay PAGCOR or are angry at having been left out of the pie distribution in the first place,” he said, again asking not to be named due to the sensitivity of the subject. “Fact is they make quite a considerable contribution, problem is where does all that “contribution” go. As well as the taxes and fees, POGOs operating in the country face other hidden and rising costs. The office rentals in Manila have soared, though there is little opportunity
