ESTIMATED P22 BILLION YEARLY IN INCOME TAXES FROM POGO WORKERS
Interagency task force fast-tracking completion of list of foreign POGO workers
An interagency task force formed to monitor the number of foreign nationals employed in Philippine offshore gaming operations (POGOs) is fast-tracking measures to finalize a complete list of these workers with the goal of collecting an estimated P22 billion or more yearly in income taxes from them.
In a meeting presided by Finance Secretary Carlos Dominguez III last week, the members of the interagency task force discussed several measures to complete the foreign workers’ list after they discovered gaps or inconsistencies in the respective figures they had initially submitted to reconcile their records.
The members of the task force agreed to meet again with the Finance chief on March 29 to come up with the complete list.
“There are still gaps in the numbers and we need to close those gaps. In our computations, there is at least P22 billion a year not being collected in the income taxes from these POGO workers who could possibly exceed 100,000 in number,” Dominguez said during the meeting, which was held at the Department of Finance (DOF) central office in Manila.
He said the Philippine Amusement and Gaming Corp. (PAGCOR), Department of Labor and Employment (DOLE), the Securities and Exchange Commission (SEC), the Department of Justice (DOJ)’s Bureau of Immigration (BI) and the various special economic zones need to come up with a comprehensive list of these foreign workers in POGOs.
“We have to get a clear picture here,” Dominguez said. “If we do not have that, how can the BIR (Bureau of Internal Revenue) do its job, which is to collect taxes from everybody so that we are being fair to all Filipinos who are paying their taxes?”
During the meeting, BIR Deputy Commissioner Arnel Guballa said an initial list of 64 out of 205 service providers of POGOs showed that they employ a total of 33,000 foreign workers or an average of 515 per service provider.
Thus, with 515 foreign workers employed in about 200 service providers, the government should be collecting income taxes from about 103,000 aliens working here, Guballa said.
Guballa said the BIR also came across a newspaper report in China stating that foreign workers in POGOs here receive an average of 10,000 yuan, equivalent to about $1,500 or P78,000 a month.
Dominguez said with an average income tax of 25 percent of their salaries, this yields an estimated amount of P18,750 a month left uncollected by the BIR from each foreign worker–or a total of roughly P22.5 billion a year in foregone income tax revenues.
This rough computation does not even include yet allowances and other fringe benefits, which are also taxable, Dominguez said
He asked PAGCOR to resolve this estimate and the claim by POGO service providers that these foreign workers are paid an average of P35,800 or about 5,000 yuan a month, representing only about $700 a month.
“We have to go after these guys because they are not paying taxes. Simple,” Dominguez said. “We hope that everybody will be 100 percent cooperative here so that these guys can get their taxes collected.”
He said a foreign worker, say from China, would not leave his country to work here if he would just get–as PAGCOR reported–$700 a month or around P35,800, which is just a third above the minimum daily wage, given that they have special skills, which is the reason they were hired as POGO employees in the first place.
Guballa said the BIR is now starting to validate the list given by PAGCOR.
During the meeting, Dominguez also learned that foreign workers in POGOs might also be present in special economic zones (SEZs) in the country, such as those in Bataan and Clark and in the Aurora Special Economic Zone and Freeport (APECO), which is allowed to operate online gaming operations in Makati City.
After finding out that the government still lacks a clear picture of all gambling operations in the country and the foreign workers they employ, DOLE Secretary Silvestre Bello III, who leads the interagency task force, along with DOLE Assistant Secretary Benjo Benavidez, Secretary Raul Lambino of the Cagayan Economic Zone Authority (CEZA), SEC Commissioner Javey Paul Francisco and BI Deputy Commissioner Tobias Javier suggested to Dominguez the following measures:
- The BI, PAGCOR, SEC and the special economic zones will submit their respective complete lists to DOLE, so the department can find out if these workers already have valid alien employment permits (AEPs) or should be issued AEPs;
- Before the DOLE issues AEPs, the workers should first register with, and get their Taxpayer Identification Numbers (TINs) from, the BIR; and
- POGOs that have initially registered their operations as just business process outsourcing (BPO) activities will be required to amend
their articles of incorporation in order to keep their licenses to operate here.
Dominguez, for his part, said POGO service providers should all be registered with the SEC, whether as corporation, partnership or representative office; and every POGO foreign worker should also report his or her place of residence, and if necessary, change of residence, change of employer and/or change of employment status.
Benavidez bared that the DOLE so far has a list of 54,241 foreign workers issued with AEPs, while Javier reported that the immigration bureau had issued 59,000 working visas and another 83,700 special working permits (SWPs).
Lambino said CEZA’s list of 1,044 foreign workers with valid working visas has already been turned over to the BIR’s office in Region II (Northern Luzon).
Francisco, meanwhile, said it was possible that some POGO service providers may have registered directly with PAGCOR without first going to the SEC.
Dominguez said during the meeting that tax revenues collected from foreign workers are necessary to help the government raise enough funds for the salary increases of Filipino government employees as well as for President Duterte’s priority initiatives such as the “Build, Build, Build” program.
“We will meet again on the 29th and we will discuss the list and additional lists from all the other agencies that provide employment and visas without reference to PAGCOR, DOLE and the BIR. And of course, we will also ask for a list of all the operations so that SEC can check,” Dominguez said.