Today, the Bureau of Internal Revenue of the Philippines (BIR) for the first time closed a tax-dodging online gambling operator. GEGAC (Great Empire Gaming and Amusement Corp.) was the first unregistered offshore gaming operator in the country that faced a closure order issued by the BIR.
The operation was led by the Arnel Guballa, BIR Deputy Commissioner, and Tony Lambino, Assistant Secretary at the Department of Finance, along with the Quezon City Police District (QCPD) members. According to preliminary information provided by Mr. Guballa, the suspended online gambling operator was the second-largest POGO service operator in the Philippines. As explained by Mr. Lambino, 8,100 foreigners work at the company, with 2,000 of them being employed in the GEGAC office in Quezon City.
BIR Deputy Commissioner revealed that apart from the action against Great Empire Gaming and Amusement Corp., parallel closure operations are being held against the operator’s services in Subic and Parañaque, too.
The authorities revealed that tax violations were the reason why the Government shut down the above-mentioned offshore gaming operator. As revealed by Mr. Guballa, the Government sent letters requiring from such operators to comply with the country’s regulatory framework about two to three months ago, but still, the operators did not take the warnings into account, which eventually led to the regulatory action against them.
Foreign Workers Employed by POGOs Do Not Pay Taxes, Authorities Say
The Government officials did not reveal the amount of unsettled taxes owned by Great Empire Gaming and Amusement Corp.
According to the Philippine Amusement and Gaming Corporation (PAGCOR), for the time being, there are 60 offshore gambling operators which have licenses to offer their services. However, before the action against GEGAC took place, the country’s gambling regulator has suspended application only for new POGO licenses.
An interagency body which was entitled to carry out an investigation into offshore gambling operations has estimated that there are approximately 138,000 Chinese nationals who work in the online POGO businesses. BIR Deputy Commissioner Mr. Guballa, on the other hand, has pointed out that Philippine’s Bureau for Internal revenue estimates that over 100,000 of these foreign employees do not pay the required taxes, which is not fair to local people, whose wages are automatically taxed.
As mentioned above, the investigation held by the Philippine Bureau of Internal Revenue showed that Great Empire Gaming and Amusement Corporation has no registration for value-added tax purposes, which basically means that the operator is in breach of the country’s existing tax code. An inter-agency task force has been formed by the Filipino Government to monitor and conduct investigations into tax-dodging offshore gambling operators, also known as POGOs.
The total amount of withholding taxes from POGOs which the Bureau of Internal Revenue has collected as of August 2019 was worth PHP186 million. The BIR is expected to get another PHP170 million in tax payments from offshore gambling businesses which have been employing foreign residents, most of whom have been Chinese nationals.
