By Chino S. Leyco
State-run Philippine Amusement and Gaming Corp. (Pagcor) warned that the proposed tax on offshore gaming operators may only impose additional burden on legitimate operations while incentivizing the black market.
Andrea D. Domingo, Pagcor chairman and chief executive, said yesterday that over taxation would impede the growth of emerging offshore gaming industry hailed as one of the primary drivers of property sector boom.
“Fair and reasonable taxation is good. Over taxation will of course kill the legal and legitimate business operations. For illegal operations, it will not matter,” Domingo told reporters in a mobile phone message.
She also said that Philippine offshore gaming operators (POGO) may leave the country or shutdown their operations if the bill imposing a five-percent franchise tax on revenues and a 25-percent withholding tax on foreign workers’ income is passed into law.
Domingo suggested that Congress should give POGOs some breathing space to allow the new industry to grow and mature first before the government imposes additional taxes.
“I would recommend that and I can only pray they will listen,” the Pagcor chief said.
On Monday, the House ways and means committee unanimously endorsed House Bill No. 5267 seeking to impose new taxes on POGO that is projected to generate P20 billion to P45 billion in additional revenue for the government.
Once passed into law, the measure will amend the National Internal Revenue Code of 1997 by imposing a five-percent franchise tax directly on gross receipts of POGO licensed by Pagcor.
The bill also plans to set the withholding tax on POGO workers annual earning at 25 percent.
“I think the bill will be up for debate and discussion in plenary soon enough. The legal minds and the constitutionalists in Congress will surely debate on this matter. Then we will see how they will resolve these issues,” Domingo said.
Currently, there are 60 POGOs licensed by Pagcor and about 218 service providers employing foreign nationals who are mostly Chinese.
Data from the Department of Labor and Employment, about 119,000 alien employment permits and special working permits were already issued by the agency to Chinese nationals.