MALACAÑANG on Tuesday, November 19, backed the pronouncement of the Department of Finance (DOF) that Philippine offshore gaming operators (POGOs) should be taxed.
The statement was issued after the Office of Solicitor General said the POGOs are not subject to Philippine tax.
“The Office of the President has been informed of the opinion of the Office of the Solicitor General (OSG) on whether Philippine Offshore Gaming Operators (POGO) Licensees and Service Providers may be subjected to income tax for profits earned from the placing of bets on their facilities,” Presidential Spokesperson Salvador Panelo said in a statement.
“At the onset, the Palace notes that it is the Department of Finance (DOF) which has the primary mandate based on the Administrative Code to formulate, institutionalize and administer fiscal policies in coordination with other concerned subdivisions, agencies and instrumentalities of government. As such, the discretion of the DOF, alongside the Bureau of Internal Revenue (BIR), carries significant weight on matters of taxation,” he added.
DOF Secretary Carlos Dominguez III earlier supported the five-percent franchise tax on POGOs and their service providers.
Solicitor General Jose Calida, for his part, said taxes cannot be imposed on POGOs as they do not derive their income within the Philippine territory.
Panelo, however, believed Calida’s opinion “was issued in response to -- and was based on the representations of -- an official from the Philippine Amusement and Gaming Corporation (Pagcor) and is thus subject to change, depending on the elaboration of factual circumstances.”
Panelo stressed that POGOs, which are domestic corporations, are covered by Section 23 (E), Chapter II of the National Internal Revenue Code (NIRC).
Thus, their income “shall be subjected to Philippine taxes regardless of whether the same was derived from a source outside of the Philippines,” the Palace official noted.
“As for those POGOs considered as foreign corporations, they too are taxable but only for income which they derived from sources within the country. This is pursuant to Section 23 (F), Chapter II of the NIRC,” Paneo said.
“With this, we trust that the DOF, together with the BIR, has the competence to evaluate the respective charters and operations of these entities in order to subject them to Philippine taxes in accordance with the law,” he added.
Panelo said that while the issue is being studied “at length” by the DOF, it is clear that the state “cannot be denied its right to collect on all applicable taxes on any entity or individual.”
“This is particularly true with regard to the case of individuals working in these companies for certainly, their compensation, salaries or wages for the services they render here are considered taxable income under Section 23 (A) & (D) of the NIRC,” he said.
He further cited that the Supreme Court has ruled that, "Taxes are the nation’s lifeblood through which government agencies continue to operate and with which the State discharges its functions for the welfare of its constituents."
“In order to defray the expenses of the government, the State has, among its inherent powers, the authority to tax. This Administration will not be stymied nor estopped by technicalities caused by the exploitation of developing technologies in collecting what is due the government,” Panelo said. (NASE/SunStar Philippines)