Philippines Offshore Gambling Operators Face Additional Taxes

Philippines Offshore Gambling Operators Face Additional Taxes

November 21, 2019 Off By Kristin Simmons

Philippines Offshore Gambling Operators Face Additional Taxes

Joey Salceda, an Albay Representative, introduced a new law that aims to impose extra taxes on alien Philippines Offshore Gambling Operators or POGOs employees in the country. The legislation will directly affect about 130,000 non-Filipinos. The Philippines hopes to get an annual boost of over $475m from the new tax law.

Salceda believes that since these companies operate from the Philippines, their employees should pay taxes. Although the operators pay certain taxes, their staff’s income is not subject to any particular tax code. 

 

Breakdown of the Tax Proposal

The approval of House Bill 5267 could result in the imposition of a 15% levy on salaries, wages, and other compensation types for their alien employees. Additionally, the legislation proposes an extra 5% tax on POGOs’ gross gaming proceeds. 

Moreover, Salceda proposed that live remote table game operators for POGOs should pay $10,000 every month. Similarly, he requested that all random number generated games offered should remit $5,000 every month. 

According to Salceda, the new system would make government supervision of the industry easier, resulting in improved tax intake. Moreover, it will provide a more accurate way of determining how many POGOs employees the Philippines has.  

 

Where it all Begun

In August, China started putting pressure on its neighboring countries to outlaw online gambling. Cambodia gave in to China’s requests, but the Philippines remained adamant. Consequently, tension developed between the Philippines and China. 

China contends that some POGOs are illegally targeting its citizens, who shouldn’t practice gambling when they are in their country. Another concern that the People’s Republic has raised is money laundering and other forms of illicit cross-border fund flow. In August, a Philippines-based Chinese Embassy stated that such activities are undermining China’s financial security and management. 

 

Presidents’ Meeting and Decision

To ease the tension between China and the Philippines, the presidents of the two countries met to deliberate on the issue. President Rodrigo Duterte of the Philippines disagreed to shut down the 60 licensed POGOs, citing it was in the best interest of his country. However, he gave his Department of Finance a directive to sanction companies that violated tax liabilities. As a result, some outstanding operators were shut down. 

The Philippines government is also preparing to extradite China citizens who currently work at POGO centers. 

In October, the Immigration Bureau conducted raids on eight POGO establishments in the western part of the Philippines and imprisoned 324 citizens of China. The charge against these foreigners was that they were running online gambling businesses without authorization. 

 

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