BIR projecting weak POGO revenue in 2021

THE Bureau of Internal Revenue (BIR) projected collections of P3.92 billion from Philippine Offshore Gaming Operators (POGOs) in 2021, based on the industry’s weak tax yield in January.

BIR Deputy Commissioner Arnel SD. Guballa said January collections from the embattled industry, which has been exiting the Philippines, amounted to P372 million, down 68.63% from a year earlier.

“The total projection for POGO revenues for taxable year 2021, our projection is P3.92 billion based on January voluntary payments,” Mr. Guballa told the Senate Ways and Means Committee.

“So the (full-year) amount is based on the January actual collection multiplied by 12 months,” he added.

The Senate committee is discussing a bill taxing the industry.

Mr. Guballa said collections dropped in January because most POGOs stopped operating.

“The real reason on this drop in collection is that during the pandemic… most of the POGOs stopped operating, that is one major factor that’s why there was a drop in collection,” he said.

“So there are still some who are paying but nonetheless, their operations are now dramatically smaller,” he added.

The Supreme Court in June also issued a temporary restraining order against a provision of Republic Act No. 11494 or the Bayanihan to Recover as One Act, which imposes 5% franchise tax on the industry.

The high court also stopped the implementation of the BIR’s Revenue Regulations No. 30-2020 and memorandum circulars 102-17 and 078-18, after 14 licensed POGOs questioned the franchise tax.

Senate President Pro Tempore Ralph G. Recto in January 2020 filed Senate Bill No. 1295 which seeks to impose a 30% income tax rate and franchise tax equivalent to 5% of gross receipts.

Foreign-based operators are also subject to 30% income tax attributed to game offerings or facilities that are in-country.

Mr. Recto said that the government could collect P65 billion from the industry if the proposed tax measure is passed.

“Of course, it is not my desire to tax them to death. The idea is to nurture them but be able to collect the taxes also at the same time,” he said.

Arnold Ferdinand C. Salvosa, assistant vice-president of the Philippine Amusement and Gaming Corp. licensing department, said the casino industry opposes the 5% franchise tax because it maintains a 97% payout rate leaving them with a margin of 3%.

“When you tax based on gross revenue, actually abonado pa ang casino (the casino is out of pocket)… For example, on a 5% tax on gross, say for a P100 bet, the casino would be taxed P5, while we’re only actually retaining P3,” he said.

“So that’s why the casino industry is really objecting to the tax on gross betting or turnover. The industry will die,” he added. — Vann Marlo M. Villegas

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