Exit plan

The Marcos administration can’t pop the champagne just yet even as Filipinos cheered the President’s big pronouncement during his State of the Nation Address, ordering a total ban on the Philippine offshore gaming operators (POGOs).

Now, his administration needs to do a lot of cleaning up and serious work as part of the post-POGO exit plan.

For one, the government would have to make up for the losses in revenue and business activities from the POGO exit – however insignificant our authorities deem this to be.

Economic managers said the costs of POGO far outweigh the benefits. Still, our taxman would need to find alternative sources of revenue to make up for what would be lost from the POGO industry’s exit from the country.

This is especially urgent with slower fiscal consolidation hounding the Marcos administration now and in the years to come.

The Bureau of Internal Revenue (BIR), for instance, is now looking at taxing online sellers to raise additional revenue. According to its plan, merchants or sellers in online platforms are now subject to withholding tax effective last month.

BIR’s Revenue Regulation 16-2023 states that one-half of the gross remittances of e-marketplace operations and digital financial services providers to the sellers or merchants for goods or services shall now be subject to a one percent creditable withholding tax.

BIR Commissioner Romeo Lumagui Jr. stresses that this is not a new tax but merely including the sector in the withholding tax system.

It’s not yet clear how much the BIR expects to collect from this sector but with the proliferation of online sellers, it must be significant.

Will this make up for the taxes collected from POGOs? We’ll have to wait and see.

Taxes collected from POGOs more than doubled to almost P10.3 billion last year although still below the expected P32 billion when the Duterte administration passed the POGO Law in 2021.

From January to May this year, BIR data showed that taxes from POGOs already reached P14 billion – consisting of income, franchise, withholding, documentary and other taxes. This does not yet included license fees and share of the government in gaming revenues.

Will the BIR’s plan to tax