The Philippine Bureau of Internal Revenue (BIR) announced today that it has shut down a tax-dodging online gambling operator in Parsay City for failing to pay its tax dues on its 2019 earnings.
Synchronization Anywhere For You Inc (SAFYI) thus became the first Philippine Offshore Gaming Operator (POGO) to be closed by competent regulators for failing to pay a recently introduced 5% franchise tax.
The BIR said in a statement issued earlier today that SAFYI was expected to pay PHP114 million in taxes on gross gaming receipts in 2019.
The Philippines launched its POGO program a few years ago. The move enabled the nation’s gambling regulator, PAGCOR, to issue licenses to companies interested to provide offshore gambling services from within the country.
Such companies usually target Chinese gamblers or customers from other parts of the region. According to recent PAGCOR data, there are currently 60 POGO license holders to operate on the territory of the Philippines. There are also hundreds POGO services providers that power POGO operators with the necessary software to conduct gambling activities.
PAGCOR last year announced that no new POGO licenses would be issued for an unspecified period of time, following pressure from Chinese lawmakers who told their Philippine colleagues that POGO companies illegally hiring undocumented Chinese nationals should be punished.
The New Franchise Tax
The BIR said in a statement today that SAFYI was the first POGO operator to be shut down by the bureau for failing to contribute 5% of its annual gross gaming receipts for taxable year 2019.
The government agency also noted that its Task Force POGO, together with the Philippine Department of Finance, remain committed to collecting all the required taxes from entities that have set up shop in the country and have been conducting gambling activities.
The BIR launched its crackdown on POGO companies failing to pay their tax dues last fall. The bureau closed several POGO service providers violating tax rules in the early days of its campaign against tax-dodging businesses.
It was last fall again when the Philippine government approved the proposed implementation of a 5% tax on all POGO license holders (franchises). The tax rate was enforced by Presidential Decree No. 1869.
Prior its implementation, POGOs were required to pay a 2% tax. Philippine lawmakers expect the higher rate to result in more than PHP20 billion in gambling money entering the nation’s coffers every year.
The government also approved the implementation of a 25% tax on POGO employees’ salaries, wages, annuities, compensation, remuneration, and any other emoluments, including honoraria and allowances, at a minimum annual threshold of PHP600,000.
The move aimed to help the nation combat the inflow of undocumented POGO workers, mostly Chinese nationals, that has been recorded with the boom of the POGO industry. The tax is also expected to raise PHP25 million annually.