Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No,_7919

Introduced by REPS. JOEY SARTE SALCEDA

AN ACT
IMPOSING TAXES ON OFFSITE BETTING ACTIVITIES
LOCALLY LICENSED GAMES, ADDING A NEW SECTION 125-A
TO THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED, AND FOR OTHER PURPOSES

EXPLANATORY NOTE

Remote forms of placing wagers were not anticipated in the 1980s and 1990s, when the bulk
of Philippine laws on gaming were formulated and crafted. With the rapid emergence of digital
technologies, however, and compounded by the need to limit mobility and gatherings due to
COVID-19, electronic betting, whether clearly legal or otherwise, has become a widespread
activity.

The move towards electronic or remote betting activities is not new. Indeed, several local
government units (LGUs) have already authorized these activities, at various levels, within their
jurisdictions. However, because the regulatory framework for such activities has not been
clarified, the national government has been unable to maximize the revenue potential of such
activities. Not clarifying whether these activities fall under the revenue-collecting ambit of the
national government also prevents more accountability and transparency in the system, as the
Bureau of Internal Revenue (BIR) does not have clear and explicit legal oversight on the
revenue-generating capacity of these activities.

The confusion is compounded by the fact that most of these activities are electronic derivatives
of already licensed physically-conducted activities.

Republic Act No. 7160, or the Local Government Code granted the Sangguniang Bayan (at the
Municipal and City level) the authority to “authorize and license the establishment, operation,
and maintenance of cockpits, and regulate cockfighting and commercial breeding of
gamecocks.”” The LGC, however, appears not to have been able to anticipate the limits of
these powers in the case of electronic betting on such activities. Furthermore, many such
activities do not fall within the purview of the goverment gaming agencies, such as the
Philippine Amusement and Gaming Corporation (PAGCOR) or the Philippine Charity and
‘Sweepstakes Office (PCSO)

* Local Government Code (LGC), Sec. 458, par. 3 (v) and Sec. 446, par. 3 (v).


While the law established LGU authority over cockfighting to be spatially limited as in the
Local Government Code, which establishes the LGU power to license the establishment of
cockpits, regulate cockfighting, and the commercial breeding of gamecocks, a key concern is
the lack of clarity as to the extent of LGU powers over such electronic activities, which the
Code was unable to anticipate.

As such there too is no clear tax regime on electronic betting activities on games already
licensed by local authorities. It appears that electronic betting, as it concerns the national
airwaves, can be regulated by Congress and the national government but the games to be
broadcast themselves will be regulated by the local governments concerned.

To maximize the revenue-generating capacity of the national government over these games
without overstepping the powers of local governments and of the government gaming agencies,
proposes to impose a tax regime on “Offsite Betting Activities on Locally Licensed
Games,” which shall exclude “games and activities specifically authorized by law to be
performed by the government gaming authorities, such as the Philippine Amusement and
Gaming Corporation (PAGCOR) and the Philippine Charity and Sweepstakes office (PCSO).”
This regime will ensure that the government will still be able to collect taxes on activities where
there is ambiguity as to regulatory purview.

‘The tax shall be 5% of gross revenues derives from Offsite Betting Activities on Locally
Licensed Games as defined in this bill, and shall not be in lieu of taxes required by the local
government units, and regulatory fees and charges imposed by government agencies. This is
consistent with the bill’s intention not to overstep the authority of the local government units.

Furthermore, to establish transparency and accountability in these activities, it also empowers
the BIR to “to accredit and inspect totalizators and other gambling devices used in the
collection, consolidation, and recording of wagers made in offsite betting activities on locally
licensed games.” This will allow the BIR to verify tax assessments.

It also requires relevant gaming operators to specify “Ofisite Betting Activities on Locally
Licensed Games” in disclosures and documentations required by the BIR and other regulatory
government agencies and instrumentalities. This requirement will help ensure that the
government can monitor the activities of such operators.

While the government seeks new revenue streams to fund its COVID-19 priorities, this bill
responds to this government need by imposing new national government taxes on activities that
already exist and will undoubtedly continue to exist as digital technologies grow more
sophisticated, but are not being imposed such taxes. Unlike other tax proposals which may have
adverse socioeconomic impacts and may dampen economic growth and recovery, this proposed
regime will not impose taxes on any goods and services essential to the Filipino people.

The regulatory checks that this bill establishes will also provide the government with more
tools to regulate and monitor these activities and verify tax assessments.

As a national internal revenue tax, the tax imposed by this bill will also generate revenues that
will be:shared with local government agencies, on top of the taxes that they themselves can
impose, which this bill does not prevent them from doing.


In view of the bill’s benefits, and in view of the government’s need for revenue sources that do
not dampen growth and instead impose taxes on non-essential activities, the approval of this
proposal is urgently sought.

JOE A


Republic of the Philippines
HOUSE OF REPRESENTATIVES.
Quezon City, Metro Manila

EIGHTEENTH CONGRESS
Second Regular Session

House Bill No, 7919
Introduced by REPS, JOEY SARTE SALCEDA

AN ACT
IMPOSING TAXES ON OFFSITE BETTING ACTIVITIES
ON LOCALLY LICENSED GAMES, ADDING A NEW SECTION 125-A
TO THE NATIONAL INTERNAL REVENUE CODE OF 1997,
AS AMENDED, AND FOR OTHER PURPOSES,

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

SECTION 1. A new Section 125-A of the National Internal Revenue Code of 1997, as
amended, is hereby added to read as follows:

“SEC, 125-A, TAX ON SERVICES RENDERED BY OPERATORS OF
OFFSITE BETTING ACTIVITIES ON LOCALLY LICENSED GAMES.
— ANY PROVISION OF EXISTING LAWS, RULES, OR
REGULATIONS TO THE CONTRARY NOTWITHSTANDING,
THERE SHALL BE LEVIED, ASSESSED, AND COLLECTED A TAX
EQUIVALENT TO FIVE PERCENT (5%) BASED ON THE GROSS
REVENUE OR RECEIPTS DERIVED FROM OFFSITE BETTING
ACTIVITIES ON DULY LICENSED GAMES, AND FROM SIMILAR
RELATED AND/OR DERIVATIVE ACTIVITIES OF ALL
OPERATORS OF SUCH ACTIVITIES BY GAMING OPERATORS:
PROVIDED, THAT SUCH REVENUES SHALL BE DIRECTLY
REMITTED TO THE BUREAU OF INTERNAL REVENUE (BIR):
PROVIDED FURTHER, THAT SUCH TAX SHALL NOT BE IN LIEU
OF LOCAL GOVERNMENT TAXES AND REGULATORY FEES AND
CHARGES APPLICABLE TO SUCH ACTIVITIES.

IN VERIFYING THE ASSESSED TAX DUE, THE BIR SHALL HAVE
THE AUTHORITY TO ACCREDIT AND INSPECT TOTALIZATORS
AND OTHER GAMBLING DEVICES USED IN THE COLLECTION,
CONSOLIDATION, AND RECORDING OF WAGERS MADE IN
OFFSITE BETTING ACTIVITIES ON LOCALLY LICENSED GAMES.

FOR PURPOSES OF THIS SECTION, “OFFSITE BETTING
ACTIVITIES ON LOCALLY LICENSED GAMES” SHALL REFER TO
ACTIVITIES WHICH INVOLVE PLACING WAGERS, BY REMOTE


AND/OR ELECTRONIC MEANS, ON GAMES DULY AUTHORIZED
AND LICENSED BY LOCAL GOVERNMENT UNITS IN THE
EXERCISE OF THEIR POWERS UNDER REPUBLIC ACT NO. 7160,
AND WHICH DO NOT FALL UNDER THE GAMES AND ACTIVIVIES
SPECIFICALLY AUTHORIZED BY LAW TO BE PERFORMED BY
THE GOVERNMENT GAMING AUTHORITIES, SUCH AS THE
PHILIPPINE AMUSEMENT AND GAMING CORPORATION
(PAGCOR) AND THE PHILIPPINE CHARITY AND SWEEPSTAKES
OFFICE (PCSO).

OFFSITE BETTING ACTIVITIES ON LOCALLY LICENSED GAMES
SHALL INCLUDE BUT SHALL NOT BE LIMITED TO OFFSITE
BETTING ON LOCALLY AUTHORIZED AND REMOTELY
BROADCAST COCKFIGHTING MATCHES.

“GAMING OPERATOR” SHALL REFER TO THE DULY
REGISTERED RESIDENT ENTITY, SUCH AS A CORPORATION,
PARTNERSHIP, INDIVIDUAL OR ASSOCIATION, WHICH IS
SUPERVISING, MANAGING AND OPERATING OFFSITE BETTING
ACTIVITIES ON LOCALLY LICENSED GAMES AS DEFINED IN
THIS SECTION. WHEREVER APPLICABLE, “OFFSITE BETTING
ACTIVITIES ON LOCALLY LICENSED GAMES” SHALL BE
INCLUDED BY THE GAMING OPERATOR IN DISCLOSURES AND
DOCUMENTATIONS REQUIRED BY THE BIR AND OTHER
REGULATORY GOVERNMENT AGENCIES AND INSTRUMEN-
TALITIES.”

SEC. 2. Implementing Rules and Regulations. ~ Within thirty (30) days after the
effectivity of this Act, the Commissioner of Internal Revenue shall promulgate the rules and
regulations necessary for its implementation.

SEC. 3 Separability Clause. — If any part or provision of this Act is held invalid or
unconstitutional, the remaining parts or provisions not affected shall remain in full force and
effect.

SEC. 4. Repealing Clause. — All laws, decrees, orders, rules, and regulations
inconsistent with the provisions of this Decree are hereby repealed or modified accordingly.

SEC. 5. Effectivity. — This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in any newspaper of general circulation.

Approved,