Taxation for Expansion: PAGCOR Moves Towards Uniform Regulation in the Philippines

The Philippines is moving towards a new taxation system to simplify regulation of local iGaming operators in the jurisdiction.

Eliminating Economic Zones

The news is that the Philippine Amusement and Gaming Corporation (PAGCOR) head regulator recently came out against a new proposal to grant limited tax breaks to firms holding a Philippine Offshore Gaming Operator (POGO) license.

Uniform Taxes

Inside Asian Gaming reports that PAGCOR Chair/CEO Andrea Domingo asserted the state-run organisation's opposition to a measure under legislative consideration that would introduce a unified tax system to POGO license holders.

Opposition

The report has the final passage of this proposition delayed to review a counterproposal from local iGaming enterprises providing licensees with special dispensations for basing operations in one of several special economic areas including but not limited to the Subic Bay Freeport Zone or the Clark Freeport Zone.

Closing the Free Zones

Instead of special incentive zones, Domingo seeks a uniform taxation system holding all POGO license holders in the Philippines to the same rate and also “all policies, regulations and laws” applied uniformly.

Favoritism Concerns

Domingo characterised any two-tier solution as favoritism which has no place “in government.”

History of Taxation

The move towards a uniform taxation system in the Philippines began last year when House Bill 5777 proposed an across the board 5% gross gaming tax revenue tax for license holders. The measure also sought to impose a 25% “withholding levy” on all foreign nationals at gaming companies who earned over $12,400.

Philippines President's Position

Philipines President Rodrigo Duterte is reportedly on-board with the uniform tax suggestion which stands to bring in some $935 million in annual revenues.

Recovering

Like many nations, the report indicates that the Philippines is seeking to raise cash to make up for pandemic related shortfalls. Calling the POGO tax regime initiated in House Bill 5777 “fair and good,” Domingo further indicated beneficiaries from a uniform tax program include both the government as well as wider public and local iGaming firms.

Outlook

With PAGCOR reporting Q2 year-on-year revenue declines of19.9% and sequential declines of 14.2% ($293.7 million); PAGCOR is continuing to expand: a rapid uniform tax levy may be the best solution to support rapid expansion in the interests of economic recovery.