The Philippine House of Representatives has unanimously approved legislation that imposes a new 5 percent tax on Philippine Offshore Gaming Operators (POGOs). House Bill No. 5267 also includes a 15 percent tax on salaries and other fees paid to foreigners.
“A clear, definitive tax regime for POGOs will be a potent revenue source, as well as a means of placing these facilities under stricter oversight,” said Rep. Joey Salceda, who sponsored the bill. Salceda estimates the new taxes will increase government revenues by about PHP44 billion (US$880 million). “Failure to faithfully report revenues and expenses will now unequivocally constitute tax evasion,” Salceda said.
But Solicitor General Jose Calida takes the surprising view that POGOs cannot be taxed at all, because by definition an offshore operator derives income “from sources outside the Philippines.”
Calida apparently is alone in his perspective. Senate Minority Leader Franklin Drilon said, “The opinion of the Office of the Solicitor General is erroneous, misplaced and misguided. It does not serve the interest of the country. Who will benefit from it? I do not think that we are prepared to face the consequences that may arise from such an erroneous opinion.”
“It is clear that the whole activity is conducted in the Philippines and, therefore, is subject to the jurisdiction of the Philippines,” Drilon continued. “Because if you say otherwise, then PAGCOR (the Philippine Amusement and Gaming Corp.) would have no authority over them.”
