Philippine-licensed online gambling operators have reportedly agreed to a new tax framework that will see their over 100k Chinese employees pay withholding taxes on their salaries.
For some time now, the Philippine Amusement and Gaming Corporation (PAGCOR) has been trying to get its (currently) 56 licensed Philippine Offshore Gaming Operators (POGOs) to pay their full share of tax into state coffers.
On Monday, the Inquirer quoted Finance Secretary Carlos Dominguez III saying the government had worked out a framework with the online sector to ensure that their Chinese employees—hired because the POGO operations are primarily China-facing, requiring a facility with Mandarin—pay the required withholding taxes on their salaries.
The Bureau of Internal Revenue (BIR) estimates that, as of this month, the government will begin reaping P2b (US$39m) per month via these withholding taxes, adding a hefty P24b to the BIR’s annual haul. By way of comparison, the entire POGO program—taxes, fees, everything—brought in only P7.4b in 2018.
The BIR also believes the new regime will also enable it to lower the boom on illegal online operators who flock to the Philippines to take advantage of the local business infrastructure without paying the government anything.
PHILIPPINES, CHINA DO DIPLOMATIC POGO DANCE
POGO operators and their support services are expected to occupy 1m-square-meters of office space in Manila by the end of 2019, a 12-fold increase from 2016, the year the POGO program began. The vast influx of Chinese employees has also caused spikes in local condominium and housing rental prices, which is great for landlords, not so great for local residents seeking places to live.
Philippine President Rodrigo Duterte recently expressed a live-and-let-live approach to the influx of Chinese workers, claiming that any move to reduce the number of Chinese POGO workers would likely result in a retaliatory move targeting the roughly 300k Filipino ex-pats currently working in China.
The fact that POGOs generally target gamblers in China—where the only legal form of gambling is the state-run lotteries—has yet to prod Beijing into any sustained criticism of the Philippines’ POGO program. On July 1, Finance Secretary Dominguez told local media that the Philippine government was “not talking to the Chinese government about [online gambling].”
A couple months ago, PAGCOR publicly claimed that POGOs’ Chinese-language websites catered exclusively to customers “based in countries other than China.” PAGCOR defended this somewhat dubious claim by pointing to a requirement in its charter that POGOs only target customers in jurisdictions where gambling is legal.
China’s predominant concerns to date regarding the POGO program have focused on reports that Chinese nationals were being ‘trafficked’ by POGO operators. Local media has been replete with tales of Chinese nationals being lured with promises of high wages and good living conditions, only to have their passports confiscated upon arrival in the Philippines, where they must work long hours for less pay than they were promised.