New Audit Shows Philippines Offshore Operators Owe Taxes
A recent audit in the Philippines has revealed that Philippine Offshore Gaming Operators have left the country without paying taxes and fees, to the tune of almost $30 million.
When operating gaming services in a country, the provider is supposed to pay fees and taxes based on the regulations of the region. For the most part, such payments are made with no trouble or delay. However, in the Philippines, it seems that Offshore Gaming Operators (POGOs) are not paying up. Several operators have reportedly left the region and did not pay fees and taxes, stiffing the country by almost $30 million.
What are POGOs?
The POGOs are providers of online casino games located inside the Philippines. The platforms basically offer services to players that do not live in the area. Operators must be licensed by the Philippine Amusement and Gaming Corporation before services are allowed.
The Philippine Commission on Audit recently provided information on the lack of payments, and it was discovered that operators owe around $27 million. The findings of the audit were made public during the annual review of PAGCOR. The regulator reviews all aspects of the industry, keeping tabs on POGOs, land-based venues, and VIP online gaming.
Why the Large Debt?
In China, all forms of gambling are banned. This includes in-person and online betting. The only place to wager is in Macau. The offshore gaming sites in the Philippines usually target high rollers from China. Before the pandemic began, POGOs were able to earn a lot of money from gamblers, helping the local Filipino government.
Over the past few years, Philippine President Rodrigo Duterte has rejected the calls from China to stop its POGO industry. The president says that the websites are too much of a benefit to let go of. Early last year, PAGCOR announced that an additional 5% would be added in taxes to POGOs gross gaming revenues. A monthly gaming tax of $10,000 was also set per live table game dealer. Each online slot game was boosted with a $5,000 tax.
It seems the added taxes and the pandemic have resulted in POGOs hightailing it out of the Philippines’. For some, the payments they already owed were left behind. The audit report explained that past due receivables from operators were the accounts that had canceled their online gaming sites.
PAGCOR provides the government with 50% of its net income from operators. The gaming agency is now short on regular payments because the number of POGOs has decreased. The country used to offer 60 and now has only 33.
With the onset of the pandemic, land-based operations were heavily affected in the Philippines. For most of 2020, the gaming venues were closed. Because of the closure, gaming tax payments were much lower than normal. Because of the revenue loss, President Duterte actually decided to change his mind about a casino on Boracay Island so that money could be made to help the country.
Andrew Tan now has plans to create a casino on the island, and Galaxy Entertainment might decide to bring back its casino plan for the region. With two new venues, it is sure to bring more gaming revenues to the region and help with local needs.
It is unclear as to what, if anything, PAGCOR will do to try and recoup the money owed by POGOs in the region. Hopefully, something can be done so that payments are made and the region is not short on funds due to the nonpayment by gaming providers. Only time will tell what will happen in this case.