Quezon City goes after e-games outlets over P100-million back taxes

MANILA, Philippines - The Quezon City treasurer’s office is likely to run after at least 22 e-games establishments operating in the city that allegedly owe the city government between P88 million and P100 million in back taxes.

City Assistant Treasurer Ed Villanueva said the city council has directed the treasurer’s office to issue Letters of Authority against the e-games operators last Friday.

Villanueva said they are currently conducting a thorough research to make sure that all e-games operators in Quezon City are covered by Letters of Authority, which would facilitate the assessment of the cash flow of the establishments and determine how much “back taxes” these businesses should pay the city government.

“We need to know where the money is going… the cash flow of their business for eventual assessment,” Villanueva told The Star in an interview yesterday.

He said they estimate that e-games operators, including Philweb and the Philippine Gaming Corp. (Pagcor) should remit around P88 million to P100 million in back taxes.

The e-games outlets, which operate round the clock 363 days a year, is a project of the Pagcor. The Philweb, on the other hand, is a private firm that installs software in all e-games establishments, as well as monitors and maintains e-casino software for Pagcor.

Last week, Quezon City Councilor Ariel Inton alleged in a privilege speech before the Quezon City council that Pagcor, Philweb, and e-games operators “shortchange” the local government by remitting “incorrect” tax through “misdeclaration” of their gross earnings.

Inton explained in a subsequent interview that the operation of e-games is subject to a three percent franchise fee, as provided for under a city resolution, which states that Pagcor Internet casinos should remit such percentage of their gross revenue every year.

Inton argued that neither Pagcor nor Philweb must be exempt from remitting to the city government three percent of their gross revenues for the operation of the e-Games in Quezon City.

“This e-casino or e-games is the most lucrative e-gaming of Pagcor,” Inton told The Star.

“They have been under-declaring their gross earnings and therefore, paying the incorrect tax to the city government… They have to settle their back taxes or face termination of their special permits to operate their business in Quezon City,” he also said.

According to Inton, operators have declared only 28 percent of the full gross revenues of the e-games outlets in Quezon City.

This means that the operators, Philweb, and Pagcor is merely remitting 3 percent of the 28 percent gross revenues to the Quezon City government.

“Operators are required or mandated by management Philweb to make a daily deposit of their daily net wins to the Philweb bank account,” Inton pointed out. “The big question here is the remaining 72 percent.”

Inton said both Philweb and Pagcor should likewise pay taxes to the city government. He noted that Pagcor ’s exemption from paying the franchise fee for being a government-owned and controlled corporation (GOCC) has already been withdrawn under the Local Government Code as well as Quezon City Revenue Code.

Philweb should pay the franchise fee to the Quezon City government since it is “a 100 percent private corporation.”

Inton further disclosed that Philweb has been discovered to be operating e-games outlets and should pay taxes as an e-games operator.