GGRAsia – POGO public finance role not substantial: Gatchalian

POGO public finance role not substantial: Gatchalian

Aug 02, 2024 Newsdesk Latest News, Philippines, Top of the deck

A Philippine senator who has been a long-standing critic of offshore online gaming operators being based in that country, has reiterated – quoting figures – the idea that the sector’s contribution overall to public finances is not “substantial”.

Sherwin Gatchalian (pictured in a file photo), chairperson of the Senate Committee on Ways and Means, which oversees public revenue-raising matters, stated in a Thursday update on his website, referring to Philippine Offshore Gaming Operators: “POGOs have been lobbying to create an impression that they generate substantial revenues but that is not the case.”

On July 22, the Philippine leader, President Ferdinand Marcos Jr, said that POGOs – now known as Internet Gaming Licensees (IGLs) – would need to end their business in that country by year-end.

Senator Gatchalian stated that – based on actual revenue collection reported by the country’s Bureau of Internal Revenue (BIR) for 2023, offshore online operators had remitted PHP10.32 billion (US$177.1 million) to the government.

The country’s gambling regulator, the Philippine Gaming and Amusement Corporation (Pagcor), had by contrast generated from that sector an income of PHP5.17 billion in 2023, he stated.

Based on a calculation of the average annual growth rate for the offshore online sector, the tax bureau’s collection from POGOs was expected to reach PHP16.08 billion this year, while Pagcor was anticipated to generate an income of PHP5.95 billion from the industry this year.

At a Senate hearing at the end of July, Alejandro Tengco, Pagcor chairman, had said the Philippine government stood to lose around PHP23 billion a year from licence fees and taxes on offshore operators. He added that 43 licensees were currently operational.

In a recent written reply to GGRAsia, Catalino Alano, Pagcor assistant vice president for external communications, stated: “Financially, the decision to ban POGOs will have a minimal impact on the Philippine gaming industry since the segment accounts for less than 5 percent of [aggregate] gross gaming revenue.”

Nonetheless Mr Tengco had suggested in a recent interview with ABS-CBN News, that up to 14 business-to-business (B2B) services companies should be spared that country’s online offshore gaming business ban.

They are licensed as Business Processing Outsourcing entities (BPOs), and provide services to offshore online operators but do not themselves offer business-to-consumer services. He said such BPOs employed more than 9,000 Filipinos.

Senator Gatchalian’s Thursday posting on his website, indicated 25,064 local workers were employed by the offshore online sector as a whole, based on data sourced from Pagcor by the country’s Department of Labor and Employment.

Mr Gatchalian posted that to ensure the ban on POGOs continues beyond the office term of President Ferdinand Marcos Jr – which is due to run until June 2028 – the Senate Committee on Ways and Means was pursuing relevant legislation.

Mr Gatchalian has previously said that local-level administrations across the country – known as LGUs (local government units) – had an important role to play in monitoring ‘illegal’ activities of existing POGOs.