Recto files bill taxing POGOs

Senate President Pro-Tempore Ralph G. Recto has filed a bill seeking to impose a 30-percent income tax and five percent franchise tax on offshore online gaming operations in the country.

Recto said Senate Bill No. 1295 seeks to establish a tax regime for Philippine Offshore Gaming Operators (POGOs) which are duly licensed and authorized by the Philippine Amusement and Gaming Corporation (PAGCOR) to provide online gambling services to players outside the Philippines.

The bill covers POGO companies in the Philippines, local gaming agents and POGO service providers. Despite the fact that POGO is a growing industry in the Philippines, Recto said the nature of its business activity creates confusion in the enforcement of the country's existing laws.

Under PAGCOR rules and regulations on POGO operations, licenses are issued to Filipino-based or foreign-based operators. Service providers that form part of the components of the POGO gaming operations such as gaming software provider, business outsourcing provider and content streaming provider are likewise required to secure a license.

"Both Philippine-based and foreign-based POGO operators are taxable on their income from gaming operations and other related services," Recto said.

"Establishing the tax regime of POGOs and incorporating the same in the National Internal Revenue Code (NIRC) of 1997, as amended, is necessary to remove any doubt and avoid the confusion as to whether or not POGOs are taxable in our jurisdiction," he explained.

Under the bill, licensed Philippine-based POGOs, local gaming agents and service providers shall be subjected to a 30-percent income tax, the taxable amount will be derived in the preceding taxable year from all sources within and outside of the Philippines.

Foreign-based POGOs shall also be subjected to a 30-percent income tax based on their gross income derived from game offerings or facilities located within the Philippines.

On top of the 30-percent income tax, Recto's bill also proposed the imposition of a five-percent franchise tax on all gross receipts derived from gaming operations of both Philippine and foreign-based POGO operators.