Operators considering Isle of Man switch after POGO tax hike

A significant tax hike for Philippine Offshore Gaming Operators (POGOs) could lead to an influx of companies looking to move to the Isle of Man, according to one industry expert.   

Egaming companies in the Philippines are facing a more-than-double tax hike after new rules were signed into law. 

POGOs – companies licensed by the Philippine Amusement and Gaming Corporation (PAGCOR) to provide offshore gaming services – will have to pay 5% tax on turnover, replacing the previous 2% gross revenue tax. 

Failure to comply could result in companies losing their PAGCOR licences and it seems many companies are exploring other options.  

Alex Gardner, director of Isle of Man-based Affinity Group, which supports egaming operators looking to set up in the Isle of Man, said the company had noticed an uptick in enquires.

 She said: “The Philippines has historically been a jurisdiction chosen by Asian-facing operators but, following the recent negative press surrounding POGO and more recently the tax increase, we have seen an influx of enquiries from operators who are looking for a suitable licence to either continue or start targeting the Asian market.  

“The Isle of Man is perfect for this having developed an international reputation as being a leader in the egaming industry and is already home to some of the biggest Asian facing operators in the world.  

“As a company that has helped many start-ups and established companies through the Isle of Man Licence licensing process it is understandable that many operators are considering moving their operations from the Philippines.”

The bill in the Philippines has been signed into law by president Rodrigo Duterte as part of the Bayanihan to Recover as One Act, as the Philippines aims to close gaps in its Covid-19 relief fund. 

All 60 licensees were forced to halt operations as part of the Covid-19 lockdown and the government has seemingly taken this opportunity to crack down on companies failing to meet tax obligations. Only 29 have since been granted permission to resume activities. 

Filipino politician Franklin Drilon said: “The Bayanihan 2 will more than double the tax collection from POGO, from Php7 billion (US$144.5 million) estimated collection in 2019 to approximately Php17.5 billion (US$361.2 million) this year because of the reforms we have introduced in the measure. 

“All revenues from POGO will be used to fund the various types of assistance laid out in the Bayanihan 2 for all sectors affected by the pandemic.” 

PAGCOR and the Bureau of Internal Revenue (BIR) said in May that all POGOs and their service providers must fulfil certain prerequisites before being given the green light to resume activity, including settling any outstanding tax liabilities as certified by the BIR, updating payment of any regulatory fees, license fees, performance bonds or penalties owed to PAGCOR, and remittance of all regulatory fees.