Sen. Franklin M. Drilon warned that to treat Philippine Offshore Gaming Operators (POGOs) as business process outsourcing (BPO) will be detrimental to the country’s efforts to collect franchise tax owed to the government in 2019 by majority of the 60 licensed online gaming operators.
“To say that POGOs are part of our BPO industry is a dangerous argument. It has far-reaching implications that will put the government at a grave disadvantage,” Drilon said in a statement on Monday, May 4.
“The POGOs can use the statement as a defense against paying the five-percent franchise tax being imposed by the government. It will also put at risk the license fee being collected by the Philippine Amusement and Gaming Corporation (Pagcor),” he said.
Under the law, Drilon explained, the authority to operate and conduct games of chance is centralized in the Pagcor. Entities including POGOs can engage in the gambling business only upon grant of a license or franchise from Pagcor. To do that, they must pay the franchise tax.
“If POGOs are considered BPOs, then there would be no need to pay the franchise tax and the license fee,” he said. “Hindi na nga nagbabayad ng buwis. Ngayon gusto pa yatang bigyan ng incentives tulad ng totoong BPOs.”
In the last hearing of the Senate Committee on Labor on the influx of POGO workers, the Bureau of Internal Revenue (BIR) disclosed that most of the 60 licensed POGOs owed the government around P50 billion in unpaid taxes in 2019, a significant portion of which pertains to the unpaid franchise tax. The government vowed to run after the tax evaders from the POGO industry.
“The Bureau of Internal Revenue is already having difficulty collecting taxes from POGOs as it is. With the statement putting them on the same league as BPOs, even the collection of the franchise tax could be put in peril,” Drilon warned.
Drilon slammed Pagcor’s assertion that to allow POGOs to operate will generate revenues to finance the campaign against the COVID-19 pandemic. “That’s a very deceptive assertion. It is the POGOs that owe the government billions of pesos in unpaid taxes. Bayaran muna nila yan,” Drilon said.
“We wish the BIR success in running after delinquent POGOs. Thus, we hope that officials of the administration will refrain from issuing statements that could further undermine the efforts exerted by the agency in collecting unpaid taxes from POGOs,” he added.
“If only these POGOs would pay their taxes, the amount would go a long way in our effort to alleviate the plight of the poor heavily affected by the crisis caused by the Covid-19,” he stressed.
Drilon said the law is clear that POGOs are part of the gaming industry, not the BPO industry. The Inter-Agency Task Force allowed the partial operation of POGOs citing that they are an essential industry and considered BPOs.
Drilon said that to claim that POGOs are BPO companies is insulting to the industry that has fueled the Philippine economy for decades.
Business process outsourcing is a set up where non-primary business activities are outsourced to a third party — this includes accounting, payroll services, customer support.
In the case of POGOs, Drilon explained, the service catered is the main business, wherein the POGOs bring the games directly to players who reside in another country, they take the bets and pay the winners.
The main business of gambling is carried out in the Philippines because it is illegal in the place where the players reside, primarily China. This modus is a far cry from what legitimate BPOs in our country do, Drilon underscored.
The rules and regulations for POGOs issued by the Pagcor in September 2016 is clear — POGOs are engaged in the “game of chance” business, he said.
“Let us not circumvent the law. They cannot choose what law to apply whenever it is convenient for them. Dati hindi sila BPO, ngayon BPO na?” Drilon stressed.
“POGOs are engaged in gambling. Period. Hence, they should be subject to the same rules that other gambling establishments are subjected to,” he stressed.
He added: “If the gaming industry is not allowed to operate during the Enhanced Community Quarantine, then POGOs should not be allowed either. No special treatment, please.”
“If POGOs are really BPOs, then there is no need to hire Mandarin-speakers as employees on the premise that they are only engaged in back office support, no face-to-face transactions are involved. In that case, the DOLE and the Bureau of Immigration should no longer issue work permits for foreign employees of POGOs,” the former labor and justice secretary said.
He continued: “Remember that the DOLE gives work permits to foreigners only upon the premise that there is no person in the Philippines who is competent and able to perform the services for which the alien is required.”
“The truth, however, is that the POGOs are casino dealers. They deal directly with the bettors and gamblers. They are not involved in back office support at all,” he added.
Over the weekend, Drilon urged the Pagcor to publicize the names behind the 60 licensed POGO firms for the sake of transparency and accountability.