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SC upholds ruling on POGO franchise tax

May 14, 2023 Hector Lawas 124 views

THE Supreme Court has upheld its previous decision that declared the government’s imposition of a 5% franchise tax on gross bets from the operations of Philippine offshore gaming operators (POGOs) unconstitutional.

This as the high court dismissed the motion for reconsideration submitted by the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) regarding the court’s ruling last year.

In the same ruling, the SC ordered the government to refund the five-percent franchise tax collected from POGO operators based on the Bayanihan 2 Law.

The Court emphasized that failure to issue a refund would result in injustice and inequity on the part of the POGO licensees.

The Court further stated that any amount collected from POGO licensees based on the Bayanihan 2 Law implementation before the passage of Republic Act 11590, which imposes tax on Philippine offshore gaming operations, should be returned.

DOF and BIR claimed in their motion for reconsideration that the imposition of franchise tax was valid under the Philippine Amusement and Gaming Corporation’s (Pagcor) expanded licensing and regulatory authority.

However, the Supreme Court found their argument “bereft of merit.”

The POGO industry experienced a growth slump due to the COVID-19 pandemic after having its peak in the early years of the Duterte administration.

POGOs are online gambling firms that operate in the Philippines but cater to customers outside the country, and to operate legally, they must be licensed by PAGCOR.