A temporary restraining order (TRO) issued by the Supreme Court of the Philippines preventing application of a 5% franchise tax on POGO operators could halt a growing exodus from the country, according to head of research at Colliers Philippines, Joey Bondoc.
The Supreme Court issued the TRO last week in response to opposition from Philippine Offshore Gaming Operators, who have been falling in numbers as a result of increased financial pressures from COVID-19 and the implementation of new taxes.
One of those taxes, signed into law by Philippines President Rodrigo Duterte last September, aimed to double government revenues from the POGO industry by subjecting all “offshore gaming licensees, including gaming operators, gaming agents, service providers and gaming support providers” to a 5% tax on turnover rather than revenue.
The tax was partially blamed for an increase in POGO operators shutting up shop – highlighted by a decline in tenancies in Metro Manila where POGOs have become a key occupier of both residential and commercial space. However, the TRO could reverse that trend.
In an interview with Market Edge, Bondoc said that at least 150,000 square meters of office space was vacated by POGOs last year but implementation of the TRO could save another 200,000 to 300,000 square meters from following suit.
POGOs, he said, had “enjoyed and benefitted from the integrated lifestyle in Metro Manila, particularly in the Bay Area where their office buildings are near their residences, near retail, restaurants,” but the 5% tax had raised the cost of doing business.
It is not yet known whether the TRO, voted for by a count of 13-1 by Supreme Court judges, will become permanent.
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