Philippines lower house passes tax on online gaming operators

On Monday, the Philippines’ lower congressional chamber passed a bill imposing taxes on online gambling companies, known as Philippine offshore gambling operators (POGOs).

Lawmakers in the lower house approved on third and final reading a measure Congressman Joey Salceda, one of the bill’s authors, said in a statement that would generate 144 billion Philippine pesos ($3 billion) in taxes, Reuters reports. The upper chamber has yet to pass the counterpart bill. Both chambers will have to reconcile the bills before seeking Duterte’s signature.

Under the proposal, offshore gambling license holders would pay 5% tax on gross gaming receipts and revenues from other services. It would also impose a 25% tax on gross annual income of foreign employees of the firms, which employ tens of thousands of mainland Chinese workers. Service providers would be subject to regular corporate income and applicable local taxes.

In 2019, Philippines President Rodrigo Duterte rejected China’s call to ban POGOs, which have fuelled property demand and retail spending in the Philippines since 2016, saying the Southeast Asian nation needed the jobs and fees they generated.

The Philippine gaming regulator, Pagcor, collected 19 billion in fees from online gambling firms from 2016 to 2019, but lawmakers said POGOs and service providers failed to pay around $1.7 billion in taxes from 2018 and 2019. A crackdown on erring firms, tighter implementation of tax rules and travel ban on thousands of mainland Chinese workers prompted some online gambling firms to shut down last year.

The gaming regulator said the potentially new law would not lead to further exodus of online gambling operators. “Our operators are cognizant of their obligations to our government. All they want is a clear and fixed policy on taxation,” Jose Tria, the regulator’s offshore gaming licensing chief, told Reuters on Monday.