POGO tax collection was up 170% in 2019: Philippines Dept. of Finance

POGOs hire 80% foreigners, don't pay tax bills

The continued crackdown on tax evading Philippine Offshore Gaming Operators (POGOs) has made a big difference, says the Department of Finance (DOF). In comments made over the weekend, they noted a collection of PHP 6.42 billion ($126 million) in taxes from the industry in 2019.

This was a 170% increase from the PHP 2.38 billion ($46.7 million) collected from POGOs in 2018. The difference was made up entirely of the government’s efforts to crack down on tax evasion from the industry.POGO tax collection was up 170% in 2019: Philippines Dept. of Finance

The BIR said PHP 5.13 billion of the total tax collections came from withholding taxes, PHP 644 million from income taxes, and the remaining PHP 91.13 million came from value added tax (VAT) and percentage tax collections.

BIR deputy commissioner Arnel Guballa implied to reporters that 2020 would be even better. Several erring companies have told him they will begin complying with all of their tax obligations, rather than face the government’s wrath.

But employee income taxes could still be a problem, he said. As the employees originating from other countries may not stay very long, their income could be harder to capture for tax purposes. “We heard from sources that their employees come and go,” Guballa said.

BIR also noted 170 notices have been sent out to POGOs and their service providers in 2019. In total, PHP 27.4 billion is owed to the government, making the PHP 6.42 billion collected still seem paltry in comparison.

To get to that bigger sum, the government is taking one step at a time. The DOF says new withholding tax rules could result in an additional PHP 2 billion take in this year. Finance Secretary Carlos Dominguez also supports Joey Salceda’s proposed legislation to hike taxes even higher.

The question is, will the compliant industry be willing to swallow higher taxes when the tax evading part of the sector still has so much outstanding debt. Philippine Amusement and Gaming Corporation (PAGCOR) chief Andrea Domingo has cautioned that the industry is going to be cleaned up in time, and new taxes that could bring the whole sector down shouldn’t be rushed into.