Philippines Closes First Gambling Operator for Tax Evasion

  • GEGAC closed down by Philippines Bureau of Internal Revenue
  • Company found without VAT registration and in breach of country’s tax code
  • Offshore gambling operator can resume business upon full tax settlement
black and yellow shutdown sign
Offshore gambling operator GEGAC has been closed down after failing to pay the relevant taxes in the Philippines. [Image: Shutterstock.com]

GEGAC closed in tax clampdown

The Bureau of Internal Revenue of the Philippines (BIR) has decided to close the unregistered offshore online operator, Great Empire Gaming and Amusement Corp (GEGAC), after failing to pay tax.

This is the first serious step by BIR after it sent notices some months ago to all operators in the Philippines to pay their taxes and comply with the regulatory framework.

the first serious step by BIR after it sent notices some months ago to all operators in the Philippines

GEGAC is known to be the second-largest Philippines Offshore Gaming Operator (POGO). It employs around 8,100 people, with around 2,000 working in the main office in Quezon City.

The details of the investigation

The investigation was in part led by the BIR deputy commissioner, Arnel Guballa, the assistant secretary at the Department of Finance, and the Quezon City police district. Exactly how much tax was owed by GEGAC is yet to be made known.

Guballa has stated that the company will be able to resume its operation, on the condition that

They just have to settle the unpaid tax. And then, the closure will be lifted upon full payment.”

More closures and measures

BIR Deputy Commissioner Guballa also said that closures of GEGAC’s operations in Subic and Parañaque are also taking place.

The national regulator, Philippine Amusement and Gaming Corporation (PAGCOR), previously said there are 58 operators with offshore licenses to offer gambling services, and another three pending consideration. However, as of last month, new applications have been suspended.

Conversations over tax dodging

There are conversations ongoing in the Philippines about the tax requirements of employees who work for POGO status companies. These include approximately 138,000 Chinese nationals.

Guballa has since pointed out that the Bureau for Internal Revenue has calculated that over 100,000 foreign employees are not paying taxes. He believes this to unfair to local people, whose wages are taxed at source.

In its report, the BIR concluded that GEGAC had no registration for value-added tax (VAT) and was in breach of the country’s tax code. Alongside the Filipino Government, an inter-agency task force has now been set up to monitor the tax status of all POGOs currently approved.

The BIR has so far collected outstanding taxes from POGOs amounting to PHP186m ($3.56m). It estimates that another PHP170m ($3.26m) is due from POGOs employing foreign residents, mainly Chinese nationals, who have yet to pay any tax.