Philippines Offshore Gaming Operators (POGO) could soon face higher taxes on their gross revenue, as well as elevated licensing fees.
Philippine House Rep. Joey Salceda, a member of President Rodrigo Duterte’s ruling Democratic Party, introduced legislation this week that seeks to levy a new five percent tax on POGO gross gaming revenues. The increase comes by reclassifying the licensed online gaming operators as resident corporations instead of PAGCOR-accredited service providers.
PAGCOR – the Philippine Amusement and Gaming Corporation – regulates land-based and offshore gaming, and operates its own casinos and satellite gaming venues.
Salceda’s bill additionally calls for a monthly gaming tax of $10,000 per live POGO remote table game dealer, and $5,000 per month for each random number generated (RNG) game offered.
The regulatory push comes as a result of POGOs facing much scrutiny in recent months from China. The People’s Republic argues the Philippine gaming sites unlawfully target its citizens, who are legally barred from gambling while in the mainland.
Money at Stake
In August, the Chinese Embassy in the Philippines issued a scathing letter to PAGCOR and Duterte urging “concrete and effective measures” be implemented to punish POGOs that accept wagers from customers located in China.
“The fact that the Philippine casinos and POGOs and other forms of gambling entities are targeting Chinese customers has severely affected China’s interests,” the embassy statement declared.
A huge amount of Chinese funds have illegally flown out of China and into the Philippines, involving crimes such as cross-border money laundering through underground banking, which undermines China’s financial supervision and financial security,” the letter added.
The Philippines doesn’t disagree. After meeting face-to-face with China President Xi Jinping, Duterte said the 60 licensed POGO operators wouldn’t be shuttered because “we need it to benefit the interest of my country.”
However, Duterte ordered the Department of Finance to crack down on internet gaming companies found to be in violation of their tax liabilities. The country is also trying to extradite Chinese nationals found to be working in the POGO centers.
PAGCOR chief Andrea Domingo supports Salceda’s bill. She told Inside Asian Gaming of the elevated tax and table license fees, “I haven’t seen the exact proposal, but in general, yes. I think it’s a good idea.”
Domingo said the change could result in a 100 percent POGO tax increase for the government. The Philippines Bureau of Internal Revenue (BIR) said it collected PHP1.63 billion ($32 million) in POGO taxes January through August 2019.
That’s chump change compared to what the BIR says it’s short when it comes to individual taxes owed by foreigners working in POGO businesses. The agency believes it’s owed roughly $410 million in unpaid individual taxes.
Last month, the Immigration Bureau raided eight POGO businesses in Puerto Princesa in the western Philippines and detained 324 Chinese nationals. The foreigners were charged with operating unauthorized online gaming and other various crimes.
Tens of thousands of Chinese citizens are thought to be in the Philippines working in POGO shops, where they are able to communicate with online gamblers in their native Mandarin.