Philippine offshore gaming operators (POGOs) will have to pay extra taxes after the country’s President Rodrigo Duerte gave the thumbs-up to a new act and signed it into law. The Philippine President gave his approval to Republic Act No. 11590 yesterday. The new measure is part of the local authorities’ efforts to enforce tougher regulations on legal gambling businesses and inhibit the provision of illegal gambling services, Duerte’s spokesman Herminio Roque explained today.
Republic Act No. 11590 will enable the Philippine government to collect taxes from the offshore gaming operators more effectively. The legislation was initially proposed back in 2019 as an amendment to the National Internal Revenue Code, abbreviated as NIRC. It enforces additional taxes on the online operators on top of the franchise tax they already have to pay.
Under the new legislation, the offshore gambling operators, whose main target are Chinese customers, will have to pay a 5% tax on their gross gaming revenue (GGR). The additional tax rate applies to all operators no matter whether they are based in the Philippines or in another jurisdiction. Either way, the government will consider them to be doing business in the country. Under the provisions of the new law, all licensed offshore operators will have to comply with the 5% GGR tax.
Philippine-based licensees will also be taxed on their non-gaming revenues. The tax rate equals 25% of the operator’s taxable income generated during the year from all staff members, regardless of whether they were sourced within or outside the Philippines.
A 25% Withholding Tax for Foreign Employees
In the meantime, foreign employees working for the licensed offshore gaming operators will have to pay a 25% withholding tax on their overall income. All foreign employees are subject to this withholding tax regardless of their position, employment permit, or visa. The minimum for the withholding tax is set at ₱12,500 per taxable month.
The new legislation also requires all staff members of the offshore gambling operators, no matter what position they occupy, to have tax identification numbers. Monetary sanctions will be in place for those who violate this rule. Both online gambling licensees and service providers will suffer fines of ₱20,000 for every foreign employee that lacks a tax identification number. On top of the fines, the violators risk losing their government-issued operating licenses.
As much as 60% of the overall revenue the government collects from the POGOs will go toward the implementation of the Universal Health Care Act. Approximately 20% of the revenue will be used for other health-related programs. The remainder is allocated for the National Economic Development Authority, which shall use it for other development projects. The Philippine authorities expect to pocket roughly ₱32 billion in revenue from the offshore gambling operators next year now that President Duerte has signed Republic Act 11590 into law.
