Special InTAX: September 2021 Issue 2 | Volume 1

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

InTAX is an official publication of R.G. Manabat & Co.'s Tax Group

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Office of the President

 

On 22 September 2021, Republic Act No. 11590 or An Act Taxing Philippine Offshore Gaming Operators (POGOs) was signed into law by the President.

Salient Changes in the 1997 National Internal Revenue Code, as amended (Tax Code)

  • The definition of “offshore gaming licensee” was added to Section 22 of the Tax Code and shall be considered engaged in doing business in the Philippines.
  • The definition of “offshore gaming licensee-gaming agent” was added to Section 22 of the Tax Code who acting as such, shall neither be involved with the business operations of the offshore gaming licensee nor derive income therefrom.
  • Section 125-A of the Tax Code was added to include gaming tax on services rendered by offshore gaming licensees.

 

Particulars

Details

Gaming tax rate

5% tax in lieu of all other direct and indirect internal revenue taxes and local taxes on the entire gross gaming revenue or receipts or the agreed predetermined minimum monthly revenue or receipts from gaming, whichever is higher

 

Filing and remittance

On or before the 20th day following the end of each month

 

  • Summarized below are the income tax implication applicable to the following persons/entities:

 

Persons/Entities

Tax implications

Alien individuals employed by an offshore gaming licensee and its accredited service providers, regardless of term and class of working permit or visa

  • Subject to 25% Final Withholding Tax (FWT) based on gross income earned from all other sources within the Philippines or PHP12,500.00 per taxable month, whichever is higher. (Note: All offshore gaming licensees and service providers shall submit to the BIR an original copy of the notarized contract of employment clearly stating therein the annual salary and other benefits as well as the entitlements of the concerned alien.)
  • Required to have a Tax Identification Number (TIN)

 

In case of failure to withhold and remit the required taxes of the alien employees, penalties in accordance with the provisions of the Tax Code will apply and the concerned alien individual may also be subject to deportation and may be barred from reentering the Philippines or blacklisted as a foreign employee.

Offshore Gaming Licensees (on non-gaming revenues)

  • Philippine-based (domestic corporations): subject to 25% regular corporate income tax based on the taxable income derived during each taxable year from all sources within and without the Philippines
  • Foreign-based (resident foreign corporations): subject to 25% regular corporate income tax based on the taxable income derived during each taxable year from all sources within the Philippines

Accredited Service Providers**

** Provides ancillary services to offshore gaming licensees, which may include, but shall not be limited to, customer and technical relations and support, information technology, gaming software, data provision, payment solutions, and live studio and streaming services

  • Subject to 25% regular corporate income tax based on the taxable income derived during each taxable year from all sources within and without the Philippines and to all other applicable local and national taxes;
  • Not subject to the gaming tax under the new Section 125-A of the Tax Code

 

  • Sales to offshore gaming licensees subject to gaming tax under Section 125-A of the Tax Code are subject to 12% VAT.
  • Services rendered to offshore gaming licensees subject to gaming tax under Section 125-A of the Tax Code, by service providers (including accredited service providers) are subject to 0% VAT.
  • The implementing rules and regulations shall be issued within 90 days after the effectivity of this law by the Secretary of Finance upon the recommendation of the Commissioner on Internal Revenue.

 

Attached is a full text of RA No. 11590 for your reference.

Republic Act No. 11590

(RGM&Co. Note:  Posting date in the Official Gazette is 23 September 2021. Effectivity date is on 08 October 2021.)

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