POGOs must pay 5% franchise tax

POGOs are not exempted from paying the mandatory local franchise tax of five percent, a House leader said yesterday

A Philippine lawmaker has raised concerns over the 5 percent franchise tax to be issued to Philippine offshore gaming operators (POGOs), whether they are registered as a domestic or a foreign company. 

After Senators Franklin Drilon and Leila De Lima stated that the P50 billion (US$998 million) unpaid taxes by the POGOs should be collected and directed to fund the government’s programs against Covid-19, another lawmaker, Representative Robert “Ace” Barbers has spoken about the taxation of POGOs.  

Surigao del Norte 2nd district Representative Ace Barbers has stated that all POGOs, licensed by the Philippine Amusement and Gaming Corporation (PAGCOR), “are subject to 5 percent franchise tax”, and that the Philippine law makes no distinction between domestic or foreign operators. 

 

 

Out of the 60 POGO licensees, 10 are registered under the Securities and Exchange Commission (SEC) as domestic corporations, while the rest, being foreign companies, claim that they are not required to pay the 5 percent franchise tax since they are not physically based in the country.  

The representative said: “All these PAGCOR-licensed POGOs, including the ten that are registered with the SEC, are either domestic or foreign corporations registered to do business in the Philippines.” 

“These non-SEC registered POGOs cannot deny the fact that they have brought in their equipment, rented or bought office facilities, and have employees working in the Philippines. Thus, they cannot claim they have no physical presence here.” 

Barbers added that per Presidential Decree (PD) No. 1869, which regulates POGO activities in the country, provided no distinction between operators whether they were domestic or foreign as far as the 5 percent franchise tax is concerned.  

“I therefore believe that there is no legal issue for the Bureau of Internal Revenue to impose and collect franchise tax from all POGOs be it domestic or offshore,” Barbers said.  

Earlier this week, regulator PAGCOR stated that 11 POGOs have been granted the Authority to Operate (ARO) as they have complied with the guidelines set by PAGCOR and have paid their tax obligations with the Bureau of Internal Revenue. Additional 2 more POGOs have submitted their requirements and awaiting their ARO to resume operations.  

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