MANILA (REUTERS) – The Philippines Lower Chamber of Congress passed a law on Monday (Feb. 8) imposing taxes on online gambling companies that employ tens of thousands of workers in mainland China as the Southeast Asian nation searches for funds to grow recover from coronavirus pandemic.
Online gambling companies known as Filipino Offshore Gambling Providers (POGOs) offer online wagering to customers in mainland China, where gambling is prohibited.
In 2019, President Rodrigo Duterte rejected China's call to ban those firms that have been fueling property demand and retail spending in the Philippines since 2016, saying the Southeast Asian nation needs the jobs and fees they generate.
The legislature in the lower house approved a measure in the third and final reading. Congressman Joey Salceda, one of the authors of the law, said in a statement that taxes of 144 billion pesos (S $ 3.99 billion) would be generated.
The Upper Chamber has not yet passed the counterpart Bill. Both houses have to bring the bills into line before they can get Mr Duterte's signature.
Under the proposal, offshore gaming license holders would pay 5 percent tax on gross gaming revenue and revenue from other services.
It would also impose a 25 percent tax on the gross annual income of foreign workers.
Service providers would be subject to regular corporate income and applicable local taxes.
The Philippine Gaming Authority charged 19 billion pesos in fees from online gaming companies from 2016 to 2019. However, lawmakers said that POGOs and service providers didn't pay any taxes of around $ 1.7 billion ($ 2.27 billion) from 2018 to 2019.
Crackdown on misleading companies, stricter enforcement of tax regulations and a travel ban for thousands of workers in mainland China caused some online gambling companies to shut down last year.
In 2020, POGOs vacated 277,000 square feet of office space, the equivalent of more than 25 soccer fields, according to data from a real estate consultancy.