The Philippines House of Representatives are trying to fix their online gambling taxation problem. The House voted 198-13-2 to pass House Bill 5777 on February 8, creating an opportunity for President Rodrigo Duterte and the Senate to finally get the tax revenues they want from the Philippine Offshore Gambling Operators (POGOs).
Rappler broke the news early Monday evening:
Bill 5777 had been under consideration since late January, as the Philippines was forced to pass a bill to bump on taxes on the industry. A Supreme Court ruling in early January ruled that the 5% turnover tax the government was attempting to collect was unconstitutional.
The bill allows for the following taxes to be collected:
“Offshore gaming licensees (OGL) (or the POGOs themselves) – 5% of gross gaming receipts and revenues from other services. This is consistent with international practice. This is also consistent with the House’s position on taxing offsite betting activities (House Bill No. 8065, approved by the House on December 15, 2020, uses gross receipts or commissions, the equivalent of GGR, as its tax base).
“Nonresident aliens who are employees of OGLs – A final tax of 25% of gross annual income, remitted annually to the BIR, with presumptive minimum tax base of P600,000 gross annual income. This will be remitted quarterly and in advance.
“Service providers – Regular corporate income tax, all applicable local and national taxes. The argument that service providers are akin to business process outsourcing (BPO) activities and are thus entitled to export incentives is laid to rest as the law defines OGLs as considered to be ‘doing business in the Philippines.’”
A policy brief by the Congressional Policy and Budget Research Department (CPBRD) explains the many other provisions made by the bill. Notably, the Bureau of Internal Revenue (BIR), Bureau of Immigration (BI), and Department of Labor (DOLE) are mandated to exchange information so all taxes can properly be collected.
While this bill could soon set up a new tax regime for the industry, the CPBRD teased that the conversation around POGOs is far from over.
“But while HB 5777 addresses the tax revenue aspect of OGLs, there are other considerations such as socio-cultural, economic, governance, political and national security issues that must be taken into account in order to understand the net benefits (i.e. benefits minus costs) of the offshore gaming industry to the Philippines.”