POGOs Told to Pay Taxes in Order to Secure Clearance to Resume Work

After Philippine Offshore Gaming Operators, or POGOs, were ordered to temporarily shut operations in the face of a global pandemic that has gripped all contours of economy, they will soon be able to resume the provision of online gambling services.

However, the operators will have to follow a set of strict rules and guidelines issued last week by the Philippine Bureau of Internal Revenue, including showing proof they have paid all their taxes, in order to secure clearance to resume operations.

POGOs were ordered to temporarily shut down in mid-March and their employees, the majority of whom foreign nationals, were told to stay home and practice social distancing.

But as the Philippines is inching back to some relative normalcy, the gambling operators and their service providers will be among the businesses to be allowed to resume their work.

BIR’s POGO Task Force issued on May 6 Guidelines and Requirements that POGOs will have to follow closely in order to be able to restart operations.

POGOs Must Show Proof They Have Paid All Taxes

Under the recently published guidelines, POGO license holders will have to first prove they are properly registered in the Philippines and that they have paid all their income taxes and franchise fees to the country for 2019.

In addition, POGOs will have to show proof they have paid their withholding taxes for the months of January to April 2020 and their franchise fees for the first quarter of the year.

POGO service providers will have to follow the same guidelines and prove they have paid their 2019 income taxes and have remitted and paid withholding taxes for the months of January to April, including the 25% final withholding tax from their foreign employees.

The Philippine government approved legislation calling for the implementation of a 5% franchise tax and a 25% withholding tax on the salaries of foreign workers late last year as part of a crackdown on tax-dodging POGO license holders.

POGOs have become a booming sector in the Philippines over the past several years. The industry employs hundreds of thousands of employees, mostly Chinese nationals, and caters namely and predominantly to the Mainland China market. Online gambling is banned in China but operators have found a way round the long-standing prohibition by basing their operations outside the country.

The Philippines has become one of the most popular territories in the region for online gambling companies to set up their businesses. And although China has long been urging the country to ban online gambling activities and President Rodrigo Duterte’s proverbial dislike of gambling, the Philippines is trying to find the right balance between reining in the rapidly expanding online gambling sector and reaping all the benefits from hosting a booming industry.

Compliance Failures to Be Penalized with No Reopening Clearance

In its Guidelines and Requirements, BIR warned gambling operators that they would not be granted clearance to resume operations if they fail to comply with every single of said guidelines and requirements.

The agency also instructed POGOs and their service providers to make sure to follow and strictly adhere to all the safety and health protocols set in the recently published guidelines, including “limited operations per shift, shuttle services for employees, regular body temperature checks and disinfection within the workplace, social distancing and wearing of masks, among other measures to prevent the transmission of the novel coronavirus.”

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