The next big task of the new Philippine interagency task force will be to tally up foreign workers for tax purposes. This news comes from the Department of Finance (DOF), who announced the new goal in an article on their official site.
Specifically, the task force will be looking at Philippine offshore gaming operations (POGOs), where they suspect foreigners might be evading a total of PHP22 billion ($420 million) in yearly income taxes. Finance Secretary Carlos Dominguez III said:
“There are still gaps in the numbers and we need to close those gaps. In our computations, there is at least P22 billion a year not being collected in the income taxes from these POGO workers who could possibly exceed 100,000 in number.”
To reduce that number of tax evaders, they plan to make a comprehensive list of all foreign workers currently employed by POGOs. “We have to get a clear picture here,” Dominguez said. “If we do not have that, how can the BIR (Bureau of Internal Revenue) do its job, which is to collect taxes from everybody so that we are being fair to all Filipinos who are paying their taxes?”
The estimate of 100,000 foreign workers comes from a survey of 64 compliant POGOs, who employ 33,000 foreigners. Extrapolated out to the 200 operators in the country, they expect the number to be the 100,000 total, but it’s possible it could be more.
Based on Chinese reporting, they expect the average salary of foreign workers to be in the region of PHP78,000 ($1,500) a month.
At that rate, foreigners would expect to be taxed approximately PHP18,750 ($350) a month. Dominguez expects that especially for Chinese workers, the threat of having to pay a fair tax will deter more of them from going to the Philippines, as the pay will no longer be competitive with what they can get back home.
If the task force succeeds then, the Chinese operators in the Philippines might have a major brain drain problem. Unable to hire new talent, and potentially losing their current staff, many may have no choice but to close up shop, or go even deeper underground.
To be fair to the Philippines though, it’s only fair that they expect their income taxes be paid. In the short term, this move will likely hurt the industry, but it’s a necessary move to ensure the country offers a fair playing field to legitimate operators.