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Salceda twits Calida: Congress can impose new taxes on POGO

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House Committee on Ways and Means chair Joey Salceda has scored Solicitor General Jose Calida following the latter’s statement that the offshore gaming industry is not subject to the country’s tax system.

In a letter, Calida earlier told the Philippine Amusement and Gaming Corporation (PAGCOR) and the Bureau of Internal Revenue (BIR) offshore gaming hubs under the Philippine Offshore Gaming Operator (POGO) cannot be taxed by the Philippine Government based on the “source of income” principle under the under existing tax laws.

In response, Salceda stressed that although bets placed in POGO hubs are made outside the country, its manpower and facilities inside the Philippine soil, thus is subjected to tax.

“At least 138,000 Mainland China workers roaming in Pasay, Las Pinas and Paranaque woking for POGOs prove that these firms are operating inside Philippine territory and are deriving income from it,” said Salceda.

“Basic accounting principle—costs are recognized when revenues are recognized. So aren’t the wages here costs expensed by POGO… so, there is value added or income derived here therefore taxable he added in a separate interview with One News.

Salceda said out of 60 PAGCOR-accredited POGO hubs, only about 10 are registered with the Bureau of Internal Revenue.

Salceda warned Calida that his interpretation “rises to the level of a tax exemption—the grant of which is intrinsically the duty of Congress.”

The Albay solon explained that under the present setup, PAGCOR only merely charges two percent regulatory fee on POGOs instead of 5% franchise tax in lieu of other taxes.

“They collect P8 billion per year from this 2% and propose to remit P400m,” said Salceda.

On Monday, the House Committee on Ways and Means under Salceda unanimously approved a proposed legislation that seeks to impose five percent franchise tax in the annual gross income of offshore gaming hubs running under the POGO system.

Salceda’s House Bill No. 5267 directly imposes a five percent gross winnings of POGO gaming hubs licensed by PAGCOR.

A 25 percent withholding tax with minimum threshold of P600,000 per annum will also be imposed to annual salary of foreign personnel working in PAGCOR-accredited offshore gaming hubs.

The proposal according to Salceda will gather additional P45 billion annually for the national government.

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