DOF Asserts that POGO Earnings Must Be Taxed Despite OSG Disagreement

The Department of Finance (DOF) on Monday, November 18, disproved an opinion by the Office of the Solicitor General (OSG) stating that Philippine Offshore Gaming Operations (POGOs) cannot be taxed by the government. 

DOF maintains that POGO earnings are taxable. Finance Secretary Carlos G. Dominguez III said that according to the Bureau of Internal Revenue (BIR), a taxpayer’s income can be taxed where the service is rendered, a provision that applies to POGOs which derive income within the Philippines. 

According to Section 23, Chapter II of the National Internal Revenue Code (NIRC), whether a domestic enterprise or a foreign corporation, POGOs are subject to paying taxes for income derived from sources within the country. 

On the contrary, Solicitor General Jose Calida argued that POGOs cannot be taxed in the country based on the “source of income” principle. He adds that even though POGOs are based in the Philippines, the bets are taken outside the country. 

Finance Secretary Dominguez said that it was not the OSG’s role to interpret tax laws because it is the “primary jurisdiction” of the BIR. 

“The BIR issued an opinion to this effect months ago saying that the situs of income is where the services are rendered,” Finance Secretary Dominguez said.

“Thus, since POGOs are providing services to their counterparts in the Philippines, they are subject to income tax… The same is true for value-added tax (VAT), which is also imposed on services rendered in the Philippines,” he added. 

Presidential Spokesperson Salvador Panelo issued a statement following the contradicting statements of DOF and OSG on the taxability of POGOs. According to him, the DOF has the primary mandate, based on the Administrative Code, to formulate, institutionalize, and administer fiscal policies in coordination with other concerned subdivisions, agencies, and instrumentalities of the government. 

“As such, the discretion of the DOF, alongside BIR, carries significant weight on matters of taxation,” he added.