State-run Philippine Amusement and Gaming Corp. said it expects more shutdowns and exodus of Philippine offshore gaming operators after two major companies, including a unit of Macau’s Suncity Group, left the country.
PAGCOR said as stringent tax rules against online gaming deepened the effects of a ban on all casino operations during the community quarantine, more shutdowns were forthcoming.
“Yes, Suncity has left,” Pagcor chair and chief executive Andrea Domingo said when asked to confirm talk that Asia’s leading casino junket operator had ceased its operations here.
Jose Tria, PAGCOR assistant vice president for offshore gaming licensing, said aside from Suncity, Don Tencess Asian Solutions also sought for the cancellation of its license.
“I’ve heard there are other companies that also plan to cancel their licenses, but I haven’t received their official letters, so I can’t name them yet,” Tria said.
The government allows offshore gaming centers to partially resume operations, but majority of POGO licensees were unable to reopen over issues on taxes being imposed by the Bureau of Internal Revenue against the industry.
The primary issue hampering the resumption of POGO operations is the BIR tax clearance, which requires foreign-based online casino licensees to pay additional franchise tax, including supposed arrears, on top of franchise fees paid to PAGCOR.
POGO licensees, which usually don’t have offices in the Philippines, are contesting the imposition of the BIR franchise tax since the Tax Code allegedly does not state that entities with no physical presence in the country are subject to the levy.
Domingo said that amid the issues with the BIR, “there are others more that are leaving the Philippines” which would not only affect government coffers, but also 30,521 Filipinos working for POGO companies.
Tria said aside from POGO license holders, another 13 service providers, which involve call center operations, telemarketing, systems and hardware support, “live dealer” video streaming and other online games, had also closed shop.
He said among the contributing factors for POGOs’ decision to leave the country were government levies, particularly the franchise tax, and high overhead costs while their operations remained in limbo.
“There are other jurisdictions that have opened up offering better tax rates and friendlier environment,” Tria said.
“Some [POGOs] also can no longer take the criticisms they get each day that make them feel unwelcome in our country,” he said.
Tria said PAGCOR was doing its best to help POGO licensees and their service providers to weather the storm brought by the coronavirus pandemic and the changing business environment.
“We’re working on ways to allow the resumption of their operations, but you know, we can only do so much,” he said. “We are regulators, we have to do everything in accordance with the law.”
Tria said POGOS also have the option to bring their franchise tax issue to courts.
“We’re not tax experts. It is for POGOs to question the applicability of the franchise tax. Whatever the court decides, we follow. If they don’t want to question the tax, then they should pay it,” he said.
Property analyst David Leechiu of Leechiu Property Consultants warned that both office and residential businesses were at risk of losing substantial revenues if more POGOs and their local service providers closed shop.
POGOs currently occupy 1.7 million square meters of office space nationwide and two million square meters of residential space.