Outside of drummed up media and political scandals, the real reason why Philippine Offshore Gambling Operators (POGOs) are potentially in trouble in the Philippines is due to taxes. The Bureau of Internal Revenue (BIR) has just restated that all foreign based operators must pay a 5-percent franchise tax, and have always had to. But the Philippine Gaming and Amusement Corp (PAGCOR), regulator of the industry, disagrees.

The franchise tax must be paid for POGOs to resume operations. BIR Commissioner Caesar Dulay also noted that the tax is “not a new imposition nor is it being imposed retroactively.” He added, “From the beginning, our Bureau has maintained the position that the said tax applies to all POGO licensees and operators and there was no change of rules midstream.”

That differs from a recent PAGCOR memorandum which states otherwise. They point out that the BIR, in an Office of the Solicitor General (OSG) memorandum dating to late 2018, did not list a mandatory 5 percent franchise tax.

Dulay says PAGCOR is ignoring an earlier memorandum from late 2017, which had a section on “Taxation of Taxpayers Engaged in Philippine Offshore Gaming Operations.” Section RMC 102-2017 states: