MANILA - Offshore gaming operations are subject to Philippine tax laws since the services they provide are rendered here, Finance Secretary Carlos Dominges III said Monday.

Dominguez was reacting to a Philippine Star report which quoted the Office of the Solicitor General (OSG) as saying that Philippine Offshore Gaming Operations (POGOs) are not subject to local tax.

“The situs of income is where the services are rendered. Thus, since POGOs are providing services to their counterparts in the Philippines, they are subject to income tax. The same is true for VAT, which also is imposed on services rendered in the Philippines,” Dominguez said.

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Taxes should be imposed on operators since POGO employees are subject to duties, Senate Minority Leader Franklin Drilon said.

“Itong activities ng POGO ay clearly taxable dahil lahat ng activities ay nangyayari dito sa ating bansa. Hindi naman sa labas," Drilon said.

(POGO activities are clearly taxable since the activities happen here in our country. Not outside.)

“Yung mga empleyado ng POGO, subject to tax, ngunit yung mga operator ay exempted from our taxes. Hindi ba salungat iyon?” he added.

(Employees are subject to tax but the operators are not? Isn't that contradictory?)

The Bureau of Internal Revenue (BIR) has ordered the closure and suspension of some POGO service providers to due failure to register and various tax violations.

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In the absence of a clear law covering POGO operations, the OSG’s opinion prevails, PAGCOR chair Andrea Domingo said in a statement.

However, the PAGCOR is ready to comply if Congress will pass a law that clearly defines the tax liabilities of POGOs, Domingo said.

There are 60 licensed POGO operators in the country. The gaming regulator has suspended the processing of new permits until illegal activities are addressed.

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-- with a report from Sherrie Ann Torres, ABS-CBN News