BIR: POGO revenues to hit below P4B this year

The Bureau of Internal Revenue (BIR) expects revenues from Philippine offshore gaming operators (POGOs) to be reduced by almost half this year, a top official told lawmakers on Thursday.

During a Senate hearing, BIR Deputy Commissioner Arnel Guballa said the bureau projected this amount at P3.92 billion, almost half of the P7.17 billion collected from POGOs in 2020.

This year’s projection was based on the P327.2 million the BIR actually collected in January, multiplied by 12 months.

The January figure was 68.63 percent lower than the P1.04 billion raked a year earlier, according to Guballa.

The official did not explain why the bureau set a smaller revenue target, but cited a Supreme Court (SC) decision stopping it from collecting a 5-percent franchise tax from POGOs.

In early January, the SC en banc issued a temporary restraining order on the implementation of Sections 11F and G of Republic Act 11494, or the “Bayanihan to Recover as One Act” (Bayanihan 2); BIR Regulation 30-20; and Revenue Memorandum Circulars (RMC) 102-17 and 078-18.

The agency said in July that offshore gaming firms should pay the franchise tax before resuming operations after the enhanced community quarantine imposed by the government in mid-March to curb the spread of Covid-19 forced their suspension.

BIR Commissioner Caesar Dulay has said imposing this tax on POGO licensees was neither “a new imposition nor is it being imposed retroactively,” citing RMC 102-2017, or the “Taxation of Taxpayers Engaged in Philippine Offshore Gaming Operations,” as his agency’s basis for the move.

Guballa also told senators that the bureau was “endorsing the passage of a law [that] seeks to tax POGO licensees or operators and [foreigners] employed by POGO entities.”

This measure, he said, should amend certain provisions in the Tax Code, such as the definition of offshore gaming licensee or operator; aliens employed by POGOs shall be subject to a 25-percent tax on their salaries; and providing a franchise tax of 5 percent on all offshore gaming companies on gross gaming receipts, and that this should be paid directly to the BIR.

“Lastly, the BIR suggests that Section 115 be amended to include failure to file any income tax return and substantial underdeclaration of sales/revenues as additional grounds to suspend and temporarily close the business establishment of any person or taxpayer, not just VAT (value-added tax)-registered person or taxpayer,” Guballa added.

This section refers to the BIR chief’s power to suspend a taxpayer’s business operations.