Philippine Supreme Court suspends increased tax on POGOs

The Philippine Supreme Court on Tuesday suspended the collection of increased franchise taxes from Philippine Offshore Gaming Operators (POGOs) under the Bayanihan to Recover As One Act (Bayanihan 2), which would have raised billions in additional revenues for the government to address the coronavirus pandemic. 

SC magistrates voted 13-1 to issue a temporary restraining order preventing the Bureau of Internal Revenue and the Department of Finance from collecting 5% franchise tax on an increased tax base from POGOs, which are mostly Chinese-run, ABS-CBN News reports. Chief Justice Diosdado Peralta confirmed the ruling to reporters Tuesday evening. Supreme Court Associate Justice Marvic Leonen dissented. 

Senate Minority Leader Franklin Drilon said in September that a provision in Bayanihan 2 imposed a 5% franchise tax on the total bets received by POGOs or from the pre-determined minimum monthly revenues from their operations, whichever is higher. The increase in tax base meant raising revenue collection from POGOs from the P7 billion estimated collection in 2019 to around P17.5 billion (USD 364.1 million) in 2020. 

The taxes were intended to help fund various government projects to address the COVID-19 pandemic, including the purchase of vaccines. But a majority of the justices saw the provision as a "rider," according to the news outlet. A rider violates the Constitutional provision prohibiting laws that embrace more than one subject that should be expressed in its title.

On the other hand, Leonen's dissent noted that the title and the statement of the law included the raising of funds as among purposes of the law and to grant the presumption of constitutionality to an urgent piece of legislation passed by Congress and signed by the President.

President Rodrigo Duterte signed Bayanihan 2 on September 11, 2020 providing a fresh round of COVID-19 aid. Congress extended the validity of the law until June 30, 2021 in December last year.