A Case for POGO

Sideglance

In the scramble to strike a balance between imposing measures aimed at coping with the COVID pandemic and providing avenues to stimulate the flagging economy a law was recently signed just a couple of days ago by President Rodrigo Duterte that provides a new tax scheme for Philippine Gaming Offshore Operations (POGOs), amending and adding new sections to the National Internal Revenue Code of 1997, as well as for other purposes.

If it will be asked whether the newly signed law will augment steps towards economic recovery we will need to understand how POGO operates and makes money.

For starters, a report by Inquirer in March 3, 2020 shows that revenues derived from POGO operations in 2016 totaled only P72 million but
exponentially ballooned to P3.12 billion in 2017 to P6.11 billion in 2018 and to P5.73 billion in 2019 when Philippine Amusement and Gaming Corp. (Pagcor) management Chair Andrea Domingo oversaw how the POGOs conducted their gaming activity in the country.

Not only that but under PACOR another P18 billion was collected the in application, processing and regulatory fees of 70,000 registered Pogo workers employed by 48 operational Pogo licenses and 239 service providers for a total of P33.03 billion revenues that went straight to government.

So exactly how does POGO operate? Well basically it is online gambling or gaming allowing their customers and clients to play casino games without stepping inside and being physically present in a casino. The unique feature of POGO however is that it only allows foreigners, who are in other countries, to play. The manner of betting and payouts is done abroad through the use of electronic transactions via financial institutions.

Apparently this was deliberately imposed by PAGCOR to ensure that the clients and the gambling activity itself is not done within the country’s territory are not within our soil. In simpler terms POGOs are companies located here in the country that provide online gambling services to foreigners abroad.

These POGOs facilitate the gambling activity, whether bacarrat, poker, blackjack or roulette thru an online medium and with a virtual dealer seen on the screen. No actual and physical gambling activity is conducted here in the Philippines, everything is done online.

Now knowing that an online gambling operation is generating billions of pesos in revenue it becomes logical and practical, especially during this time of the pandemic, for the government to impose additional taxes on these POGOs in order to augment existing monetary reserves needed to revive the economy.

Hence Republic Act No. 11590 which provides that around 80% of the total revenues to be collected will go to fund health measures. Under the new law, licensed POGOs in the country will be made to pay a gaming tax of 5% on gross gaming revenues, while those working in these gaming corporations, who for the most part are largely foreign Chinese nationals anyway, shall be taxed a 25% withholding tax if their income is 600,000 pesos or more.

Also a minimum monthly withholding tax of 12,500 pesos is likewise applied covering all workers in POGOs to prevent their incomes from being mis-declared. The law will thus mandate that 60% of the tax from POGO shall be allocated for the implementation of the Universal Healthcare Act and 20% for the enhancement of health facilities while the other 20% shall be allocated for the attainment of sustainable development goals under the supervision of the National Economic Development Authority (NEDA).

We we still have to see whether the new measure will help in the recovery of the economy but definitely the new law is a step in the right direction by imposing more taxes on those who are making more money, especially in authorized gambling operations, and using these taxes for the benefit of the people who are already burdened with so many difficulties and are in dire straits due to the COVID pandemic.