Tax Treatment of Philippine Offshore Gaming Operators (POGOs)

President Rodrigo Duterte signed on September 22, 2021 Republic Act No. 11590, otherwise known as An Act Taxing Philippine Offshore Gaming Operations, Amending For the Purpose Sections 22, 25, 27, 28, 106, 108, And Adding New Sections 125-A and 288 (G) of the National Internal Revenue Code of 1997.

RA 11590 defines an Offshore Gaming Licensee (“OGL”) as the offshore gaming operator, whether organized abroad or in the Philippines, duly issued a gaming license by the Philippine Amusement and Gaming Corporation (PAGCOR), any special economic zone authority, tourism zone authority, or freeport authority to conduct offshore gaming operations, including the acceptance of bets from offshore customers. An offshore gaming licensee shall be considered engaged in business in the Philippines.

Under RA 11590, all alien individuals regardless of residency and who are employed and assigned in the Philippines by an offshore gaming licensee or its service provider shall pay a minimum final withholding tax of P12,500.00 or twenty-five percent (25%) on their gross income whichever is higher. Moreover, all foreign employees of OGLs and their service providers, regardless of nature of employment, shall secure a Tax Identification Number (TIN); otherwise, the OGL who employs or engages foreign nationals without a TIN shall pay a fine of twenty thousand pesos (Php 20,000.00) per foreign employee without a TIN.

Taxes on Gaming and Non-Gaming Revenues of OGLs

RA 11590 distinguishes between gaming and non-gaming revenues. Consequently, different tax rates apply depending on the type of revenue earned by an OGL.

The non-gaming revenue of Philippine-based OGLs shall be subject to an income tax of twenty-five percent (25%) of the taxable income from all sources within and without the Philippines. Meanwhile, foreign-based OGLs shall also be subject to an income tax of 25% but will only apply to non-gaming revenue derived within the Philippines.

The sales by VAT-registered persons to OGLs shall be subject to zero percent (0%) rate. Services rendered to OGLs subject to gaming tax by service providers shall also be subjected to 0% VAT.

On the other hand, RA 11590 imposes a five percent (5%) gaming tax, in lieu of all other direct and indirect internal and local taxes, on the entire gross gaming revenue or receipts of OGLs or the agreed pre-determined minimum monthly revenue or receipts from gaming, whichever is higher. Gross gaming revenue or receipts shall mean gross wagers less payouts.

The gaming tax shall be directly remitted to the Bureau of Internal Revenue (BIR) not later than the 20^th day following the end of each month. Sixty percent (60%) of the gaming taxes collected from offshore OGLs shall be allocated for the implementation of the Universal Health Care Act, 20% for the Health Facilities Enhancement Program (HFEP), and the remaining 20% shall be allocated for the attainment of Sustainable Development Goals (SDGs).

You can read the full text of RA 11590 here.