The Philippines is set to impose additional taxes on Philippine Offshore Gaming Operators (POGOs) in 2021 after President Rodrigo Duterte signed a new law (Republic Act 11590) into effect this week. The additional tax revenues derived from this new law will be primarily used to fund the rollout of the Universal Health Care Act.
The Philippines has a thriving online gambling market that generates millions of dollars for the country in the form of gaming taxes. The Philippine Amusement and Gaming Corporation (Pagcor) which is the main gaming regulator in the country released an official list of POGOs in June 2021 which showed that there were 41 licensed POGOs operating in the country.
Unofficial reports peg the number of POGO operators to be over 70 as a number of them are operating without a license. The Philippines has tried in the past to crackdown on POGOs but has not had a lot of success. PAGCOR has made it public that a number of POGOs are yet to pay their taxes and a total of $27.3 million in outstanding taxes needs to be collected.
The new Republic Act 11590 imposes an additional 5 percent tax on POGOs gross gaming revenues (GGR). This is in additional to all of the existing internal and external taxes that POGOs are required to pay on their gaming income. This new law also gives PAGCOR as well as the other smaller gaming regulators the authority to impose an additional tax on POGOs not exceeding 2 percent of their receipts or GGR.
Taxes On POGO Employees
The new law also imposes taxes on all foreign employees working at these licensed POGOs. Foreign nationals working in the Philippines will have to pay a flat 25 percent tax rate on their salaries. All POGOs will need to ensure that all of their foreign employees have an official tax identification number (TIN) in the Philippines.
POGOs who fail to verify if their foreign employees have a TIN will be subject to a 20,000 PHP fine for each employee without a TIN. POGOs will also have to withhold a minimum of 12,500 PHP from the salary of their foreign employees each month. The new tax regime is expected to bring in a total of 32 billion PHP by the end of 2022.
The Universal Health Care Act will receive 60 percent of all funds generated from the new tax regime.