Republic of the Philippines
House of Representatives
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL Nod 267

Introduced by Representative Joey Sarte Salceda

EXPLANATORY NOTE

Online gaming facilities, also known as Philippine Offshore Gaming Operations
(POGOs), have recently proliferated in the country, that it is necessary to determine their
taxability. While the Bureau of Internal Revenue (BIR) has issued Revenue Memorandum
Circular No. 102-2017 which clarified the tax treatment for these facilities and associated
services, a law that settles questions of taxability, through amendments in the National Internal
Revenue Code, will once and for all address confusion on the taxation of this emerging
industry.

Questions have emerged on whether POGOs do business in the Philippines, with
implications on their tax status. As the services are rendered in the Philippines, this bill seeks
to definitively answer that POGOs indeed do business in the country.

This bill also intends to clarify the taxability of POGO employees. As POGOs are
companies doing business in the Philippines, their employees” income shall be subject to tax.

A clear, definitive tax regime for POGOs will be a potent revenue source, as well as a
means of placing these facilities under stricter oversight. Failure to faithfully report revenues
and expenses will now unequivocally constitute tax evasion.

Codifying the tax regime for POGOs will provide the government a broader set of
levers with which to monitor and oversee the industry and to stabilize the gyrations in tax
revenue intake and enforcement.

In view of the foregoing, the approval of this bill is urgently sought.

JOEY SARTE SALCEDA


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 5267

Introduced by Representative Joey Sarte Salceda

AN ACT
TAXING TAXPAYERS ENGAGED IN PHILIPPINE OFFSHORE GAMING
OPERATIONS AMENDING FOR THE PURPOSE SECTIONS 22, 25, AND 119 OF
THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Title II Chapter I Section 22 of the National Internal Revenue Code of 1997,
as amended is hereby amended, to add the following:

(U0) THE TERM “OFFSHORE GAMING LICENSEE” SHALL REFER TO

THE OFFSHORE GAMING OPERATOR, DULY LICENSED AND AUTHORIZED

TO PROVIDE OFFSHORE GAMING SERVICES, WHICH MAY BE:

a. PHILIPPINE-BASED OPERATOR, A DULY CONSTITUTED
BUSINESS ENTERPRISE ORGANIZED IN THE PHILIPPINES.

b. OFFSHORE-BASED OPERATOR, A DULY CONSTITUTED
BUSINESS ENTERPRISE ORGANIZED IN ANY FOREIGN
COUNTRY, WHO WILL ENGAGE THE SERVICES OF THE
PAGCOR-ACCREDITED SERVICE PROVIDER OR SUPPORT
PROVIDER OR ANY SPECIAL ECONOMIC ZONE AUTHORITY

AND TOURISM AUTHORITIES.


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FOR PURPOSES OF THIS CODE, OFFSHORE GAMING LICENSEES
(OGL) SHALL BE CONSIDERED ENGAGED IN DOING BUSINESS IN THE
PHILIPPINES.

(JJ) THE TERM “OGL-GAMING AGENT” SHALL REFER TO THE
REPRESENTATIVE IN THE PHILIPPINES OF AN OFFSHORE-BASED
OPERATOR.

SEC. 2. Chapter III Section 25, of the National Internal Revenue Code of 1997, as

amended, is hereby amended to add letter (G) to read as follows:

(G) ALIEN INDIVIDUAL EMPLOYED BY OFFSHORE GAMING
LICENSEES - AS DEFINED IN SECTION 22 (I) OF THIS CODE, AN ALIEN
INDIVIDUAL WHO IS A PERMANENT RESIDENT OF A FOREIGN
COUNTRY AND WHO IS EMPLOYED AND ASSIGNED IN THE
PHILIPPINES BY AN OFFSHORE GAMING LICENSEE SHALL PAY A TAX
OF FIFTEEN PERCENT (15%) OF THE SALARIES, WAGES, ANNUITIES,
COMPENSATION, REMUNERATION AND OTHER EMOLUMENTS, SUCH
AS HONORARIA AND ALLOWANCES RECEIVED FROM SUCH
LICENSEE.

IN COMPUTING THE TAX PROVIDED IN THIS SECTION, TWO
HUNDRED FIFTY THOUSAND PESOS (PhP 250,000.00) SHALL BE THE
MINIMUM GROSS ANNUAL INCOME.

ANY INCOME EARNED FROM ALL OTHER SOURCES WITHIN
THE PHILIPPINES BY THE ALIEN EMPLOYEES REFERRED TO UNDER
THIS SUBSECTION SHALL BE SUBJECT TO THE PERTINENT INCOME

TAX, AS THE CASE MAY BE, IMPOSED UNDER THIS CODE.


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SEC. 3. Title V Section 119 of the National Internal Revenue of 1997, as amended, is

hereby amended to read as follows:

SEC. 119. Tax on Franchises.- Any provision of general or special law to the
contrary notwithstanding, there shall be levied, assessed and collected in respect to all
franchises on radio and/or television broadcasting companies whose annual gross
receipts of the preceding year do not exceed Ten million pesos (P10,000,000), subject
to Section 236 of this Code, a tax of three percent (3%), on gas and water utilities, a
tax of two percent (2%) on the gross receipts derived from the business covered by the
law granting the franchise AND A TAX OF FIVE PERCENT (5%) ON ALL
OFFSHORE GAMING COMPANIES ON GROSS RECEIPTS DERIVED
FROM GAMING OPERATIONS COVERED BY THE LAW GRANTING THE
FRANCHISE: Provided, however, That radio and television broadcasting companies
referred to in this Section shall have an option to be registered as a value-added
taxpayer and pay the tax due thereon: Provided, further, that once the option is
exercised, said option shall be irrevocable.

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SEC. 4. Implementing Rules and Regulations. ~ The Secretary of Finance shall, upon

the recommendation of the Commissioner of Internal Revenue, promulgate the necessary

rules and regulations for the effective implementation of this Act.

SEC. 5. Separability Clause. — If any provision of this Act shall be held unconstitutional or

invalid, the other provisions not otherwise affected shall remain in full force and effect.

SEC. 6. Repealing Clause. ~ All laws, decrees, executive orders, rules and regulations or

parts thereof which are contrary to or inconsistent with this Act are hereby repealed, amended or

modified accordingly


1 SEC. 7. Effectivity. ~ This Act shall take effect fifteen days after its complete publication
2. either in the Official Gazette or in a newspaper of general circulation.

3 Approved,