By Chino S. Leyco
Foreign-based online casino operators whose revenues come from bets from gamblers outside the Philippines are not covered by local taxes, the Office of the Solicitor General (OSG) and the Department of Finance (DOF) said.
In a letter submitted by Solicitor General Jose C. Calida to Finance Secretary Carlos G. Dominguez III last Tuesday, the OSG, however, clarified that Philippine-based companies engaged in offshore gaming services are subject to local tax laws.
These local Philippine offshore gaming operators (POGO) are those that employ foreign nationals in the country, handle the recording and live streaming of online games, as well as perform IT support services, Calida’s letter read, which Dominguez shared with reporters.
Dominguez this time agreed with Calida, saying “if the POGO (gaming operator) is located outside the country caters to foreign gamblers, then it is not subject to tax in the Philippines.”
“However, the service provider of the POGO located in the Philippines through workers/employees here, is subject to tax and VAT [value-added tax] on its fees charged to the non-resident POGO,” he added.
Dominguez further said that revenues of Philippine-based POGOs are also subject to five percent franchise tax.
Calida explained that the POGO industry regulated by the Philippine Amusement and gaming Corp. (Pagcor) has two types of service providers — the local-based and the overseas-based companies.
“It is a common misconception that POGOs are all Philippine service providers,” he said, noting there are also Pagcor-accredited companies based aboard that handle the betting and payout systems of these online casinos.
According to Calida, the Philippine-based POGO sell live-streamed games to foreign-based offshore gaming operators, and the latter collect bets from their pre-registered clients through online platform and earn from such activity.
“We clearly defined in our legal opinion that based on the rules and regulations for Philippine offshore gaming operations promulgated by Pagcor, the POGOs we referred to as not subject to income tax are the foreign-based POGOs,” Calida told Dominguez.