SOUTH EAST ASIA 24
PHILIPPINES
POGO sector seen as stabilizing The outflow of online gambling operators from the Philippines is expected to slow, at least for the time being, following amendments to tax regulations and due to uncertainties in neighbouring jurisdictions.
T
axation of Philippine Offshore Gaming Operators (POGOs) has become a politically contentious issue after legislators sought to squeeze more revenue out of the companies to make up for budget shortfalls caused by the pandemic. An attempt to impose a 5 percent franchise tax on overall turnover last year was met with howls of protest from the industry, with many choosing to vote with their feet and leaving the country in droves. The tax added to already rising costs of doing business in the Philippines at a time the firms had also been forced to shut up shop due to Covid. That tax was suspended in January following a petition to the Supreme Court from foreign gaming groups, but swiftly reintroduced in February. This time however, there is a crucial difference. It will now be 5 percent of gross gambling revenue and not total turnover.
Asia Gaming Briefings | April 2021
“It is more “acceptable” but still ridiculously high,” said Danny Too, general manager of Cherry Interactive. “That is why everything is still very much “negotiable,” though I don’t foresee an immediate exodus of all the POGO operators from the Philippines.” Too said the House of Representatives has already given its final approval for the new tax and the bill will now be transmitted to the Senate, where it must undergo another three successful readings before being sent to President Rodrigo Duterte for a final signature. The 5 percent tax is payable to the national government and only applies to master operators and not service providers. The firms will still need to pay all applicable fees and charges to the Philippine Amusement and Gaming Association (PAGCOR). There is also a 25 percent withholding tax on the income of POGO employees. The Bureau of Internal Revenue has said
it expects tax collections from POGOs to be just PHP3.93 billion this year, which is half the PHP7.18 billion raised in 2020. BIR Deputy Commissioner Arnel Guballa said this is based on January revenue of PHP327.2 million multiplied by 12 months. His estimate is more downbeat than that of PAGCOR Chair Andrea Domingo, who at the end of last year predicted POGO revenue would return to 2019 levels by Q2 of this year. She said the situation had stabilized with companies leaving the country and that the regulator was in discussions with four potential new entrants. The number of POGO license holders that are currently operating is just 33 compared with 61 prior to the Covid crisis, as of February 23, according to PAGCOR’s website. Philippines-based iGaming consultant Mark Gilbert agreed any further departures will not be due to taxation if the bill goes
