Pagcor accuses POGO tax law of driving operators away
LA Philippine Amusement and Gaming Corp. (Pagcor) said yesterday that a new law imposing higher taxes on Philippine Offshore Gambling (POGO) operators has scared operators away from moving their businesses to other countries.
Pagcor Chairman and CEO Alejandro Tengco told lawmakers during the House Appropriations Committee budget hearing that the numbers show the gaming regulator’s revenue hasn’t increased despite the implementation. of the law, which was passed last year.
Camarines Sur Rep. Luis Raymond Villafuerte said during the House Appropriations Committee budget hearing on Pagcor revenues that when Congress passed Republic Act No. 11590 (a law taxing offshore gambling operations in the Philippines) , “the hype was (that) the government will have higher revenues.
Villafuerte, however, conceded that some legitimate POGOs left the country because of higher taxes while some of them became illegal.
“They are still there but 60 to 27 remaining. Even the most legit ones like PlayTech, it’s okay to say that PlayTech is gone, isn’t it? It is one of the largest video game companies in the world. It’s a legitimate business. Why did they leave? asked the legislator.
Juanito Sanosa Jr., President and COO of Pagcor, responded, “I understand because of POGO’s high gambling tax.”
Tencgo said the reason operators are moving to other countries is because of the “better tax regime (there)”. He said Pagcor would consult with Congress if it needed to change the POGO tax regime law.
Pagcor also confirmed Villafuerte’s claim that out of 60 licensed operators, only 30 remain, of which 27 are active.
Pagcor’s request did not sit well with Albay Representative Joey Salceda, the law’s lead author, who said he “blamed a tax law that was not fully implemented until December 2021 for the weak tax collections, while all evidence points to a revival of POGO by the last few quarters. is bizarre to say the least.
“I can’t believe people will use a quarter of a tax bill‘s performance as a basis for amendments. Doesn’t that seem a little too agenda-driven rather than evidence-driven? This is Marite-driven (gossip-based) policymaking,” Salceda said.
Salceda pointed to real estate market data that shows offshore play is expected to pick up in subsequent quarters of the year.
He quoted real estate market expert Leechiu Consultants who showed there were 21,000 square meters of new leased POGO office space around the second quarter of 2022, saying that “this means that POGOs have already adapted to our laws and that they are now more comfortable with our regulations”. regime is what regulatory certainty does.
“And because they’re now taxed fairly, they’re well-regulated, and we’ve imposed transparency standards on the industry, they don’t have that stigma. For this reason, office leases for POGOs are on the rise from May, and we will likely see the tax consequences of this development by the second or third quarter of this year,” Salceda said.
“On the other hand, if you look at POGO transactions for office space at the height of COVID-19 from Q2 2020 through Q4 2022, you’ll see that almost no new office space was leased by the POGO. That should explain the revenue performance. So that’s the cause, not RA 11590, that gave them a stronger footing,” he added.