Department of Finance
The Department of Finance (DOF) issued Revenue Regulations (RR) No. 30-2020, 30 September 2020, to prescribe the rules and regulations to implement Section 11(f) and (g) of Republic Act No. 11494, otherwise known as the “Bayanihan to Recover as One Act”, on the taxes derived from gaming and non-gaming operations as other sources of funding to address the COVID-19 pandemic.
The RR provides that a five percent (5%) franchise tax shall be imposed on the gross bets or turnovers or the agreed pre-determined minimum monthly revenues from gaming operations, whichever is higher, earned by offshore gaming licensees, including gaming operators, gaming agents, service providers and gaming support providers. In addition, Income Tax, Value-Added Tax (VAT) and other applicable taxes shall be imposed on the income from non-gaming operations earned by offshore gaming licensees, including gaming operators, gaming agents, service providers and gaming support providers.
The applicable 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.
In addition, the Philippine Amusement and Gaming Corporation (PAGCOR) and/or the company awarded or chosen as its third-party intermediary/audit platform shall furnish the Bureau of Internal Revenue (BIR) with the following information:
The 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 will be subject to incremental penalties. Further, the BIR shall implement closure orders against offshore gaming licensees or operators, gaming agents and service or support providers that fail to pay the taxes due provided in this RR and/or committed any fraudulent acts. 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 revenues derived from franchise taxes on gross bets or turnovers and income from non-gaming operations shall be continuously collected and shall accrue to the general fund of the government after two years or upon a determination that the threat of COVID-19 has been successfully contained, whichever comes first.
The RR shall take effect immediately after publication in the Official Gazette or in a newspaper of general circulation, whichever comes first.
(RGM&Co. Note: The RRs were published in Philippine Star on 31 October 2020.)