POGO win their court battle against the 5% tax as the Supreme Court of the Philippines rules against the franchise tax
Back in June 2020, a House leader had stated that POGOS were not exempt from paying the mandatory 5% franchise tax. The Philippine law makes no distinction between domestic and foreign operators, according to Robert ‘Ace’ Barbers – Surigao del Norte 2nd District Representative at the time. He stated that non-SEC registered POGOs still rent or buy office facilities within the Philippines while they also employ locals, so there is a definite physical presence in the country.
However, these calls to impose the franchise tax by Robert ‘Ace’ Barbers (pictured) and other Senators such as Franklin Drilon and Leila De Lima, who demanded the collection of P50 billion in unpaid taxes, were dismissed as the Supreme Court voted in favor of POGO, against the Bayanihan 2 Act. This Act was put into place to help the country raise more funds, by introducing a tax hike, in a bid to fight against the lasting effects of the pandemic.
Due to the new ruling, 13-1, the Supreme Court has ordered a temporary restraining order on the 5% franchise tax.
This is not the first conflict regarding tax and POGOs as back in 2018 the Office of the Solicitor Generals (OSGs) declared that since POGOs main reliance on income comes from outside of the Philippines, then they could not be taxed due to this condition. Senators opposed the OSGs claims and suggested that POGOs could be taxed just like any other business.
The month of September saw a mass exodus of POGOs, Philippines Offshore Gambling Operators, due to the pandemic according to the Bureau of Internal Revenue. POGOs contribute heavily to the Philippine economy, and their exodus had a massive negative impact since POGOs had covered an estimated 11% of total leasable office space in Metro Manila, or about 1.34 million square meters, effecting the real estate market.
They also generate thousands of jobs so the suspension of this tax hike may be a blessing in disguise not only for POGOs, who will benefit from less tax, but also for the Philippine government since income tax will still be collected and 10s of thousands of people will not lose their jobs.
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