Tax Alerts

Reiteration of the imposition of franchise tax and other taxes on income derived by offshore gaming licensees as source of funding during the pandemic

(Revenue Regulations No. 30-2020 published on October 31, 2020)

This Tax Alert is issued to reiterate that income derived by offshore gaming licensees shall be subject to the 5% franchise tax and other applicable taxes. The franchise tax and other applicable taxes to be collected from offshore gaming licenses shall be used to fund the subsidies and stimulus measures provided under Bayanihan to Recover as One Act (Republic Act No. 11494) or the Bayanihan II.

Offshore gaming licensees, including gaming operators, gaming agent, service providers and gaming support providers, shall be subject to the following:

  1. Franchise Tax at the rate of five percent (5%) imposed on the gross bets or turnovers, or the agreed pre-determined minimum monthly revenues from gaming operations, whichever is higher; and
  2. Income tax, value added tax, and other applicable taxes on income from non-gaming operations.

The above taxes shall be computed on the peso equivalent of the foreign currency used and based on the prevailing official exchange rate at the time of payment.

Non-payment, underpayment and/or payment of taxes computed not in accordance with the prevailing official exchange rate at the time of payment shall be considered as fraudulent acts and subject penalties provided under the Tax Code.

Moreover, closure orders shall be implemented against operators, licensees or agents, and service or support providers  that fail to pay the above taxes. The implementation of closure orders against operators, licensees or agents shall necessarily include the closure of all their respective accredited service providers, which must also cease to operate.

The above taxes on offshore gaming licensees shall revert to the general fund of the government after two years or upon a determination that the threat of COVID-19 has been successfully contained or abated, whichever comes first.