PHILIPPINE OFF-SHORE GAMING OPERATIONS (POGO) AND THEIR TAXES -
PHILIPPINE OFF-SHORE GAMING OPERATIONS (POGO) AND THEIR TAXES

PHILIPPINE OFF-SHORE GAMING OPERATIONS (POGO) AND THEIR TAXES

POGO In The Philippines

The Philippine Offshore Gaming Operations (POGO) has been a major contributor to the Philippine economy since its entry to the country sometime in 2003. Since then, more and more foreign companies and entities are entering the Philippines to get a slice of the lucrative offshore gaming market. As the number of POGOs increase, regulating them has been a problem, thus, the Philippine government has tasked the Philippine Amusement and Gaming Corporation (PAGCOR) with the main responsibility of regulating and the registration of POGOs. There are also other regional gambling regulators which the Philippine government allows to issue offshore gaming licenses like Cagayan Economic Zone Authority (CEZA), Aurora Pacific Economic Zone & Freeport Authority (APECO), and Authority of the Freeport Area of Bataan (AFAB).

In this article, you will learn about the different classifications of POGOs, their applications processes and the taxes that they are subjected to in the Philippines.

TWO (2) DIFFERENT CLASSIFICATIONS OF POGO OPERATORS

  • Philippine-based Operator – Philippine-based Operator refers to a duly constituted business corporation organized in the Philippines who will either conduct offshore gaming operations themselves or engage the services of PAGCOR-accredited service providers
  • A Foreign-based Operator refers to a duly constituted business corporation organized in any foreign country who will engage the services of a PAGCOR-accredited local gaming agent and service providers for its offshore gaming operations.

WHAT IS THE PROCESS FLOW FOR APPLICATIONS FOR PHILIPPINE-BASED OPERATOR?

  1. Submission of Letter of Intent addressed to the PAGCOR Chairman and CEO.
  2. Acknowledges Letter of Intent and initial evaluation of applications
  3. Issuance of Deposit Notice and Payment Form for payment of application and processing fee
  4. Upon payment, Applicant MUST submit copy of proof of payment of the application and processing fees and secure clearance from FOCAS-OGLD
  5. Upon receipt of the proof of payment, LD-OGLD will issue a pre-numbered application kit and table of checklist of documentary requirements
  6. Submission of complete documentary requirements (MUST be accomplished within 3 months from issuance of a pre-numbered application kit)
  7. Final review, recommendation and endorsement of applications to the AVP, OGLD
  8. Board Approval
  9. Notice of Approval to the applicant
  10. Payment of License Fee/s, Performance Bond Fee and Permit to Possess Fee
  11. Issuance of License to Philippine-based Operator

WHAT IS THE OFFSHORE GAMING LICENSE?

An Offshore Gaming License (OGL) is an authority granted by PAGCOR to Philippine Offshore Gaming Operators for the establishment, maintenance and the conduct of offshore gaming operations in a specific site within the jurisdiction of PAGCOR. 

No operator shall be allowed to conduct offshore gaming operations without a valid OGL evidenced by a certificate issued by the OGLD

WHAT ARE THE THREE (3) TYPES OF OFFSHORE GAMING LICENSES?

A. E-casino – refers to an OGL for the operation of Live Casino Games or Random Number Generator (RNG) based games. 

B. Sportsbetting – refers to an OGL for the acceptance and/or facilitation of wagers in the operation of predicting the outcome and results of a sporting event.

C. Sportsbetting on Regulated Wagering Events

WHAT ARE THE TAXES THAT POGOs ARE SUBJECTED TO?

Like any other person or entity doing business in the Philippines, POGOs are subjected to Philippine taxes. Pursuant Bureau of Internal Revenue (BIR) Revenue Memorandum Circular No. 102-2017 POGOs are subjected to the following taxes:

  1. INCOME TAX –
  1. Income from Gaming Operations, which refer to income or earning realized or derived from operating of gambling casinos, gambling clubs and other similar recreation and amusement places and gambling pools.
  2. Income from Other Related Services, which refers to income or earning realized or derived not from gaming operations but from such other necessary and related services, shows and entertainment.
  • VALUE-ADDED TAX
  • Income from Other Related Services from non-gaming operations shall be subject to normal income tax, value-added tax, and other applicable taxes, as may be deemed appropriate.
  • FRANCHISE TAX
  • The entire gross gaming receipts/earnings or the agreed or pre-determined minimum monthly revenues/income from Gaming Operations under existing rules, whichever is higher, shall be subject to a franchise tax of five percent (5%), in lieu of all kinds taxes, levies, fees or assessments of any kind, nature or description, This income is therefore exempt from any kind of tax, income or otherwise, as well as fees, charges or levies of whatever nature, whether national or local.
  • A Licensee deriving income from both gaming operations and from other related services  shall be subjected to 5% franchise tax on its gaming revenues and normal income tax, value-added tax and other applicable taxes on its non-gaming revenues.
  • An Other Entity, specifically including the gaming agent, Service Provider and Gaming Support Provider who is also a POGO Licensee shall be taxed 5% Franchise tax on its gaming activities and subject to normal tax rate and other appropriate taxes on its non-gaming operations.
  • WITHHOLDING TAXES  
  • Income payments made by POGO Licensees or any other business entity licensed or authorized by PAGCOR for all their purchases of goods and services shall be subject to withholding taxes as may be appropriate and applicable.
  • Compensation, fees, and commissions or any other form of remuneration as a result of services rendered to POGO Licensees or any other business entity licensed by PAGCOR shall be subject to applicable withholding taxes under existing revenue laws and regulations.

Written by: Atty. Jon Dominic Peñaranda

Leave a Reply

Close Menu