EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
. •
S E N A T E
S. No. 1295
20 
JAN 27 
P 1 :31
Introduced by Senator Ralph G. Recto
AN ACT
ESTABLISHING THE TAX REGIME OF PHILIPPINE OFFSHORE GAMING 
OPERATORS, AMENDING FOR THIS PURPOSE SECTIONS 27, 28, 42 AND 
119 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED
EXPLANATORY NOTE
This proposed measure seeks to establish the tax regime of Philippine 
Offshore Gaming Operators (POGO). POGOs are the entities duly licensed and 
authorized by the Philippine Amusement and Gaming Corporation (PAGCOR) to 
provide offshore gaming services to players located outside the Philippines and not 
Filipino citizens.
"Taxes are what we pay for civilized society. Without taxes, the government 
would be paralyzed for lack of the motive power to activate and operate it. Hence, 
despite the natural reluctance to surrender part of one's hard-earned income to the 
taxing authorities, every person who is able must contribute his share in the burden 
of running the government. The government for its part, is expected to respond in 
the form of tangible and intangible benefits intended to improve the lives of the 
people and enhance their material and moral values."1 This Doctrine of Symbiotic 
Relationship enunciated by the Supreme Court is the rationale of taxation.
In our jurisdiction, the power of taxation of the State extends not only to its 
own citizens, but also to foreigners, natural or juridical, whether engaged in trade or
1 Commissioner v. Algue, Inc., G.R. No. L-28896 February 17, 1988
1


business with respect to their income within the Philippines. Therefore, POGOs both 
Philippine-based and foreign-based operators are taxable on their income from 
gaming operations and other related services.
However, despite the fact that POGO is a growing industry in this country, 
the peculiarity of the nature of its business activity creates confusion in the 
enforcement of our existing tax laws. Hence, 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 whether or 
not POGOs are taxable in our jurisdiction.
In view of the foregoing, the approvai of this bill is earnestly sought.
/jiao


EIGHTEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
‘A ^ 
1 * .
V,.. '. ; 
; r?' i>
S E N A T E  
S. No. 
1 2 9 5
20 
IAN 27 
P I 31
Introduced by Senator Ralph G. Recto
AN ACT
ESTABLISHING THE TAX REGIME OF PHILIPPINE OFFSHORE GAMING 
OPERATORS, AMENDING FOR THIS PURPOSE SECTIONS 27, 28, 42 AND 
119 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED
Be It enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
1 
Section 1. Section 27 of the National Internal Revenue Code of 1997, as
2 
amended, is hereby further amended to read as follows:
3 
"SEC. 27. Rates o f Income Tax on Domestic Corporations. -
4 
"(A) XXX
5 
"xxx
6 
"(D ) P H ILIP P IN E  OFFSHORE GAMING OPERATORS. 
-  THE
7 
PROVISIONS OF EXISTING SPECIAL OR GENERAL LAWS TO THE
8 
CONTRARY NOTWITHSTANDING, 
PHILIPPINE-BASED OFFSHORE
9 
GAMING OPERATORS AS DEFINED AND DULY LICENSED BY THE
10 
PHILIPPINE AMUSEMENT AND GAMING CORPORATION (PAGCOR)
11 
SHALL BE SUBJECT TO AN INCOME TAX EQUIVALENT TO THIRTY
12 
PERCENT (3 0 % ) OF THE TAXABLE INCOME DERIVED IN THE
13 
PRECEDING TAXABLE YEAR FROM ALL SOURCES W ITHIN AND
14 
WITHOUT THE PHILIPPINES.
15 
"(E) LOCAL GAMING AGENTS AND SERVICE PROVIDERS. 
-
16 
THE PROVISIONS OF EXISTING SPECIAL OR GENERAL LAWS TO THE
17 
CONTRARY NOTWITHSTANDING, ALL LOCAL GAMING AGENTS AND


1 
SERVICE 
PROVIDERS 
OF 
PHILIPPINE 
OFFSHORE 
GAMING
2 
OPERATORS (POGO) AS DEFINED AND DULY AUTHORIZED BY THE
3 
PAGCOR SHALL BE SUBJECT TO AN INCOME TAX EQUIVALENT TO
4 
THIRTY PERCENT (3 0% ) OF THE TAXABLE INCOME DERIVED IN  THE
5 
PRECEDING TAXABLE YEAR FROM ALL SOURCES W ITHIN AND
6 
WITHOUT THE PHILIPPINES.
7 
" [( ^ ]( F )
8 
"[(£)](G )
9 
"XXX"
10 
Sec. 2. Section 28 of the National Internal Revenue Code of 1997, as
11 
amended, is hereby further amended to read as follows:
12 
"SEC. 28. Rates o f Income Tax on Foreign Corporations. -
13 
"(A) Tax on Resident Foreign Corporations. -
14 
"(1) XXX
15 
"xxx
16 
"(7 ) P H ILIP P IN E  OFFSHORE GAMING OPERATORS. -  THE
17 
PROVISIONS OF EXISTING SPECIAL OR GENERAL LAWS TO THE
18 
CONTRARY 
NOTWITHSTANDING, 
FOREIGN-BASED 
PHILIPPINE
19 
OFFSHORE GAMING OPERATORS (POGO) AS DEFINED AND DULY
20 
LICENSED BY THE PAGCOR SHALL BE SUBJECT TO AN INCOME TAX
21 
EQUIVALENT TO THIRTY PERCENT (3 0 % ) OF THE GROSS INCOME
22 
DERIVED IN THE PRECEDING TAXABLE YEAR ATTRIBUTED TO GAME
23 
OFFERINGS OR FACILITIES LOCATED W ITHIN THE PHILIPPINES.
24 
"[R}](8) XXX
25 
"xxx"
26 
Sec. 3. Section 42 of the National Internal Revenue Code of 1997, as
27 
amended, is hereby further amended to read as follows:
28 
"SEC. 42. Income From Sources Within the Philippines. -
29 
"(A) Gross income From Sources Within the Philippines. -T h e  following
30 
items of gross income shall be treated as gross income from sources within
31 
the Philippines:
32 
"(1) xxx


1 
XXX
2 
"(3) Services. -  Compensation OR FEE for [labor or personal] services
3 
performed, OR INCOME FROM ANY ACTIVITY WHICH IS NECESSARY
4 
TO THE CONSUMMATION OF THE TRANSACTION, [m ] W ITHIN the
5 
Philippines;
6 
"xxx
7 
"(C) Gross Income From Sources Without the Philippines. -  The
8 
following items of gross income shall be treated as gross income from sources
9 
without the Philippines:
10 
"(1) xxx
11 
"xxx
12 
"(3) Compensation OR FEE for [labor or personal] services performed,
13 
OR INCOME FROM ANY ACTIVITY WHICH IS NECESSARY TO THE
14 
CONSUMMATION OF THE TRANSACTION, without the Philippines;
15 
"xxx"
16 
Sec. 4. Section 119 of the National Internal Revenue Code of 1997, as
17 
amended, is hereby further amended to read as follows:
18 
"SEC. 119. Tax on Franchises. -  
(A) Any provision of general or
19 
special law to the contrary notwithstanding, there shall be levied, assessed
20 
and collected in respect to all franchises on radio and/or television
21 
broadcasting companies whose annual gross receipts of the preceding year do
22 
not exceed Ten million pesos (P10,000,000), subject to Section 236 of this
23 
Code, a tax of three percent (3%) and on gas and water utilities, a tax of two
24 
percent (2%) on the gross receipts derived from the business covered by the
25 
law granting the franchise: Provided, however, That radio and television
26 
broadcasting companies referred to in this Section shall have an option to be
27 
registered as a value-added taxpayer and pay the tax due thereon: Provided,
28 
further, That once the option is exercised, said option shall not be irrevocable.
29 
"(B ) ANY PROVISION OF EXISTING GENERAL OR SPECIAL
30 
LAWS TO THE CONTRARY NOTWITHSTANDING, THERE SHALL BE
31 
LEVIED, ASSESSED AND COLLECTED A FRANCHISE TAX EQUIVALENT
32 
TO FIVE PERCENT (5 % ) OF THE GROSS RECEIPTS DERIVED FROM


1 
OFFSHORE 
GAMING 
OPERATIONS 
BY 
PHILIPPINE 
OFFSHORE
2 
GAMING OPERATORS (POGO) AS DEFINED AND DULY LICENSED BY
3 
THE PAGCOR.
4 
"XXX"
5 
Sec. 5. Implementing Rules and Regulations (IRR). -  Within thirty (30) days
6 
from the effectivity of this Act, the Secretary of Finance, upon the recommendation
7 
of the Commissioner of Internal Revenue, shall promulgate the necessary rules and
8 
regulations for its effective implementation.
9 
Sec. 6. Separability Clause. -  If any provision or part hereof is declared
10 
unconstitutional, the remainder of this Act or any provision not affected shall remain
11 
in full force and effect.
12 
Sec. 7. Repealing Clause. -  
All laws, acts, decrees, executive orders,
13 
issuances, and rules and regulations or parts thereof which are contrary to and
14 
inconsistent with this Act are hereby repealed, amended or modified accordingly.
15 
Sec. 8. 
Effectivity. -  This Act shall take effect fifteen (15) days after its
16 
complete publication in the Official Gazette or in at least two (2) newspapers of
17 
general circulation.
Approved,