POGOs: Stay or go?

PAGCOR’s income from its operation and licensing of gambling casinos, gaming clubs and other similar recreation or amusement places, and gaming pools are subject to 5% franchise tax in lieu of all taxes. For VAT purposes, the sale of goods and/or services in the course of trade or business is generally subject to VAT. However, if the Licensees are also contracted with PAGCOR in connection with the latter’s gaming operations, then the sale of goods and/or services performed with PAGCOR in relation to such gaming operations is subject to 0% VAT. The Bureau of Internal Revenue (BIR) has asked the cooperation of the Philippine Amusement and Gaming Corp. (PAGCOR) on requiring foreign and Philippine-based offshore gaming operators (POGOs) to register with the tax agency before their licenses to operate can be renewed by the state-run firm.

BIR seeks Pagcor assistance on registration of offshore gaming firms

POGO sites in the Philippines must comply with PAGCOR regulations — for instance, they must not be in a residential area, and must have a maximum floor area of 25,000 square meters. Income realized by PAGCOR’s Licensees from other related services/operations shall be subject to regular CIT, VAT, and other applicable taxes under the Tax Code. Remember to conduct thorough market research, choose the right legal structure, obtain the necessary licenses, develop a compelling gaming platform, and market your business effectively. The exporters of commodities and services includes companies into manufacturing, processing, assembly, refinery, tourism, medical tourism, agro-industrial which contribute the highest export income of 65% to the country. The IT/BPOs constitute the majority of employment generated by PEZA-registered industries at 52.77%. They allowed us to join the task force because we are asking data from Immigration and DOLE on the list of these foreign nationals,” BIR Deputy Commissioner Arnel Guballa said during a recent Department of Finance (DOF) Executive Committee (ExeCom) meeting.

PAGCOR tax treatment

For a PAGCOR Licensee enjoying an ITH, such income is exempt from corporate income tax, but is subject to VAT. Finally, if a PAGCOR Licensee’s other related operations/services or non-gaming operations are not covered by its registered activity, such income is subject to regular corporate income tax, VAT, and other applicable taxes. PAGCOR’s income from its franchise/gaming operations is subject to 5% franchise tax, in lieu of all taxes, including value-added tax (VAT).

Conversely, income from related operations/services or from non-gaming operations is subject to the regular corporate income tax, VAT and other applicable taxes. PAGCOR’s Contractees’ revenue derived from their contract with PAGCOR in connection with the latter’s gaming operations shall be exempt from regular CIT upon payment of the 5% franchise tax. gcash casino However, for VAT purposes, the goods they provided to and/or services they performed for PAGCOR in relation to such gaming operations are subject to 0% VAT.

• The 5% franchise tax shall be in lieu of other direct and indirect taxes like income tax and value-added tax (VAT).
• It stresses that entities must go through a rigorous licensing process and satisfactorily demonstrate their fitness to hold such licenses like any other business.
• The incentives granted by the concerned Investment Promotion Agency (IPA) will only apply to their income from other related services/operations or non-gaming operations that are covered by their registration with the IPA.
• This research will help you tailor your offering to the local market and identify any gaps or opportunities that your business can fill.
• This effectively excluded PAGCOR Licensees, resulting in their revenue from gaming operations being considered subject to VAT.

Repeal.�All executive orders, rules and regulations and other issuances or parts thereof which are inconsistent with this Executive Order, are hereby revoked, amended, or modified accordingly. Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. Apart from its mandatory contributions to various agencies and entities, PAGCOR has also been undertaking major Corporate Social Responsibility projects under the leadership of its present management.

The BIR said the registration of offshore gaming operators with the BIR shall be done with the agency’s regional district office having jurisdiction over the place where the head office and/or branch of the POGO hub is located. WHEREAS, RA No. 9728 created the Authonty of the Freeport Area of Bataan (AFAB) to manage and operate the Freeport Area of Bataan , and authorized it t o operate on its own , either directly or through a license to other tourism-related activities, including games, amusements, recreational and sports facilities, subject to the approval and supervision of the PAGCOR. For VAT purposes, however, the exemption extends only to those individuals or entities that have contracted with PAGCOR; hence, PAGCOR Contractees and not Licensees. As such, the Licensees’ revenues from gaming operations, involving sale of goods and/or services in the course of trade or business, are generally subject to VAT. But should the Licensees be contracted with PAGCOR in connection with the latter’s gaming operations, then the sale of goods and/or services performed with PAGCOR in relation to such gaming operations is subject to 0% VAT. By following the step-by-step guide provided in this article, you can navigate the process of starting an online gaming business in the Philippines and tap into the exciting potential of this market.