The Bureau of Internal Revenue on Wednesday told non-compliant online gaming licensees and service providers to register and pay taxes or face closure just like what happened to 18 licensed Philippine offshore gaming operators in Cagayan province.
It said in a statement it would take appropriate action against erring or non-compliant POGOs. “The BIR will shut down and/or penalize erring or non-compliant POGOs,” it said.
Eighteen POGO licensees of the Cagayan Economic Zone Authority, including their support service providers, were temporarily closed during enforcement operations by the BIR on Feb. 11.
The BIR identified the POGO entities as Asian BGE Limited, Fine Day Holdings Limited, Hana Talk Inc., NCGAC Limited, NEO Kingdom Limited, Oak Tree Services Limited, Succeed Asia Limited, Wealthy Leap and WUS Technologies Holdings Limited.
The support service providers of the POGO licensees whose operations were also suspended included Alpha Fortune Management Solutions Inc., Empire Group International & Management Tech Services Inc., Hi-Source Services Inc., Kui Business Services Inc., Lyndhurst Services Inc., Pacific Solutions Management, Rimrock ICT Services Inc., Succeed Asia Ventures Inc. and Top Asia Leisure and Entertainment Corp.
Following the raids, BIR Commissioner Caesar Dulay said the closure of unregistered POGO entities, along with other tax enforcement activities, served as a deterrent for those who would commit tax violations.
“We urge all taxpayers to comply with the bureau’s registration requirement, filing and payment of taxes and other tax obligations in order to avoid facing business closure, penalties and possible criminal charges before the court,” Dulay said.
The BIR said the business operations of the 18 POGO licensees and their service providers would remain suspended until the BIR’s registration requirements and other pertinent tax regulations were complied with and the corresponding deficiency taxes and penalties were paid.
About 40 POGO licensees and 168 POGO service providers are registered with the BIR.
The agency said that as part of its mandate, it would conduct regular surveillance and raids of non-compliant POGOs as they cheat and deprive government of revenues for pandemic response.
The BIR reported earlier that the newly-enacted POGO tax law generated P1.22 billion in additional revenue in the initial months of implementation. The number could be higher if not for the unscrupulous non-registered or non-compliant operators, it said.
“Despite the pandemic, from Oct. 9, 2021 to Dec. 31, 2021, the BIR has collected a total of P1.22 billion from offshore gaming licensees, their service providers and their employees,” the bureau said.
The figure included P709.39 million in withholding taxes between Oct. 9 and Dec. 31, 2021; P409.93 million from POGOs’ gaming revenues; P89.67 million from income taxes; P5.33 million in value added tax or percentage tax; P4.96 million in other taxes; and P3.34 million in documentary stamps tax.
“As we already have rules and regulations in place for the POGO industry, we expect POGO operations to continue and we foresee an increase in revenues arising from said activities,” the BIR said.
Section 2 of Republic Act No. 11590 or the POGO Law provides that an offshore gaming licensee is considered as engaged in doing business in the Philippines and is therefore required to register with the BIR.
Section 5 of Revenue Regulations No. 20-2021 states that non-registration of POGOs with the BIR is a fraudulent act, which bears with it the penalty of implementing the closure orders against the erring offshore gaming licensees that will also include the closure of all their respective accredited service providers.