The Philippine gaming regulator has promised to close down all Philippine Offshore Gaming Operators (POGOs) that have an outstanding tax debt. The state-run Philippine Amusement and Gaming Corp. (PAGCOR) says it will “crack the whip” on POGOs that don’t pay up, and fast.
In a September 15 statement, Philippine Finance Secretary Carlos Dominguez said the Bureau of Internal Revenue (BIR) collected about PHP200 million in income taxes from POGOs last month, far short of the expected PHP21.6 billion (US$412.9 million). “We will close down organizations that don’t withhold and remit the proper amount taxes from their employees,” Dominguez said.
PAGCOR said it’s considering several punitive measures for tax evaders, from interest payments to cash penalties to cancellation of licenses.
According to the Manila Standard, Senator Joel Villanueva said, “We call on the interior department to support the Department of Finance by asking all local government units to revoke business permits of POGOs who do not comply with our tax laws. We do not owe anything to these errant POGOs who have the gall to refuse the correct payment of taxes of their workers.”
According to Villanueva, the recent explosion of the POGO industry is akin to a “real estate bubble” that’s bound to burst. Working spaces for POGOs have taken over office spaces in Manila, hundreds of thousands of Chinese nationals have taken residence to work the POGOs, and critics of the industry have complained of an increase in criminal activity. The Bureau of Immigration and police operatives recently arrested more than 430 Chinese for telecommunications fraud, illegal gaming operation and for working without working permits in separate operations in Ortigas, Pasig, Zambales and Cebu province.
Former finance secretary Roberto F. De Ocampo agreed with Villanueva, saying, “The private sector, particularly the real estate industry, will have to exercise self-control by moderating its temptation to build ever more high-rise condo buildings mainly in anticipation of continuing vigorous POGO expansion and demand for space. Otherwise, a sudden curtailment by China of Chinese nationals’ involvement in our Pogo program may find us having built a disastrous real estate bubble, reminiscent of Thailand’s whose bursting triggered the Asian financial crisis.”
De Ocampo added, “Sensible controls, rather than anti-Chinese rants, are the best way to ensure that POGO’s pluses would outweigh its minuses.”
Meanwhile, Dominguez has ordered the BIR to ensure POGOs pay tax liabilities for each individual worker, rejecting any potential for lump sum payments in lieu of arrears obligations.
“The collection should be per individual,” he said. “You force the issue and you bring them to court … close them down.”
