September 22, 2021
REPUBLIC ACT NO. 11590
AN ACT TAXING PHILIPPINE OFFSHORE GAMING OPERATIONS, AMENDING FOR THE PURPOSE SECTIONS 22, 25, 27, 28, 106, 108, AND ADDING NEW SECTIONS 125-A AND 288 (G) OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS AMENDED, AND FOR OTHER PURPOSES
SECTION 1.Declaration of Policy. — It is hereby declared the policy of the State to promote a just and dynamic social order that will ensure the prosperity and independence of the nation and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. Towards this end, the State shall strictly regulate all forms of legal gambling and prohibit all forms of illegal gambling. While doing so, the State recognizes that revenues generated from legal gambling are not a sustainable source of income. The State further recognizes that all forms of gambling have consequences to Philippine society in general, and to Filipino...
Summary of Republic Act No. 11590 (An Act Taxing Philippine Offshore Gaming Operations)
Declaration of Policy (Section 1)
- Promote a just and dynamic social order, ensure prosperity and independence, and free people from poverty.
- Strictly regulate legal gambling and prohibit illegal gambling.
- Recognize that revenues from legal gambling are not sustainable.
- Recognize the consequences of gambling on society and families.
- Legal forms of gambling, including offshore online gaming, shall not be construed as state endorsement.
Definitions (Section 2)
- "Offshore gaming licensee" refers to operators licensed by PAGCOR, economic zones, tourism zones, or freeports to conduct offshore gaming operations, including accepting bets from offshore customers.
- No new offshore gaming licenses shall be issued by the Aurora Pacific Economic Zone and Freeport Authority.
- "Offshore gaming licensee-gaming agent" refers to the representative in the Philippines of an offshore-based operator, acting as a resident agent for receiving legal processes and complying with SEC requirements.
Tax on Nonresident Alien Individuals (Section 3)
- Alien individuals employed by an offshore gaming licensee or service provider shall pay a final withholding tax of 25% on their gross income, with a minimum of P12,500 per month.
- Gross income includes salary, wages, annuities, compensation, remuneration, and other emoluments.
- Offshore gaming licensees and service providers shall submit employment contracts to the BIR.
- Failure to withhold and remit taxes may result in deportation, blacklisting, and other penalties.
- Agencies shall issue joint rules and regulations for efficient tax assessment, verification, and administration.
- Foreign employees must have a tax identification number, or the employer will be fined P20,000 per employee without a TIN.
Income Tax on Domestic and Foreign Corporations (Sections 4 and 5)
- Non-gaming revenues of Philippine-based offshore gaming licensees shall be subject to 25% income tax. (Section 4)
- Non-gaming revenues derived within the Philippines by foreign-based offshore gaming licensees shall be subject to 25% income tax. (Section 5)
- Accredited service providers to offshore gaming licensees shall pay the regular corporate income tax rate and be subject to other applicable taxes. (Section 4)
Value-Added Tax (VAT) (Sections 6 and 7)
- Sales to offshore gaming licensees subject to gaming tax under Section 125-A shall be subject to 0% VAT. (Section 6)
- Services rendered to offshore gaming licensees subject to gaming tax under Section 125-A by service providers, including accredited service providers, shall be subject to 0% VAT. (Section 7)
Gaming Tax on Offshore Gaming Licensees (Section 8)
- A gaming tax of 5% shall be levied on the entire gross gaming revenue or receipts or the agreed predetermined minimum monthly revenue or receipts, whichever is higher, in lieu of all other direct and indirect internal revenue taxes and local taxes.
- The gaming tax shall be remitted to the BIR by the 20th day of the following month.
- PAGCOR, economic zones, tourism zones, or freeports may impose regulatory fees not exceeding 2% of the gross gaming revenue or receipts or a predetermined minimum guaranteed fee, whichever is higher.
- Gross gaming revenue or receipts means gross wagers less payouts.
- A third-party auditor shall determine the gross gaming revenues or receipts and submit periodic reports to the BIR.
- The third-party auditor shall be independent, reputable, internationally-known, and duly accredited.
- The BIR and COA may conduct post-audits or independent verifications.
Disposition of Revenues from Gaming Tax (Section 9)
- 60% of the total revenue from the gaming tax shall be allocated as follows:
- 60% for the implementation of the Universal Health Care Act
- 20% for the Health Facilities Enhancement Program
- 20% for the attainment of the Sustainable Development Goals
Oversight and Review (Section 10)
- The BIR shall submit a report to Congress every three months, including reports by third-party auditors and collection performance data of offshore gaming licensees, for review and possible adjustment of rates.
Implementing Rules and Regulations (Section 11)
- The Secretary of Finance shall promulgate the necessary rules and regulations for implementation within 90 days after the effectivity of the Act.
Separability Clause (Section 12)
- If any provision is held unconstitutional or invalid, the other provisions shall remain in full force and effect.
Repealing Clause (Section 13)
- All laws, decrees, executive orders, rules and regulations, including PAGCOR Charter, Aurora Special Economic Zone Act, and Bayanihan to Recover as One Act, which are contrary or inconsistent with this Act, are repealed, amended, or modified accordingly.
Effectivity (Section 14)
- The Act shall take effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.
Declaration of Policy (Section 1)
- Promote a just and dynamic social order, ensure prosperity and independence, and free people from poverty.
- Strictly regulate legal gambling and prohibit illegal gambling.
- Recognize that revenues from legal gambling are not sustainable.
- Recognize the consequences of gambling on society and families.
- Legal forms of gambling, including offshore online gaming, shall not be construed as state endorsement.
Definitions (Section 2)
- "Offshore gaming licensee" refers to operators licensed by PAGCOR, economic zones, tourism zones, or freeports to conduct offshore gaming operations, including accepting bets from offshore customers.
- No new offshore gaming licenses shall be issued by the Aurora Pacific Economic Zone and Freeport Authority.
- "Offshore gaming licensee-gaming agent" refers to the representative in the Philippines of an offshore-based operator, acting as a resident agent for receiving legal processes and complying with SEC requirements.
Tax on Nonresident Alien Individuals (Section 3)
- Alien individuals employed by an offshore gaming licensee or service provider shall pay a final withholding tax of 25% on their gross income, with a minimum of P12,500 per month.
- Gross income includes salary, wages, annuities, compensation, remuneration, and other emoluments.
- Offshore gaming licensees and service providers shall submit employment contracts to the BIR.
- Failure to withhold and remit taxes may result in deportation, blacklisting, and other penalties.
- Agencies shall issue joint rules and regulations for efficient tax assessment, verification, and administration.
- Foreign employees must have a tax identification number, or the employer will be fined P20,000 per employee without a TIN.
Income Tax on Domestic and Foreign Corporations (Sections 4 and 5)
- Non-gaming revenues of Philippine-based offshore gaming licensees shall be subject to 25% income tax. (Section 4)
- Non-gaming revenues derived within the Philippines by foreign-based offshore gaming licensees shall be subject to 25% income tax. (Section 5)
- Accredited service providers to offshore gaming licensees shall pay the regular corporate income tax rate and be subject to other applicable taxes. (Section 4)
Value-Added Tax (VAT) (Sections 6 and 7)
- Sales to offshore gaming licensees subject to gaming tax under Section 125-A shall be subject to 0% VAT. (Section 6)
- Services rendered to offshore gaming licensees subject to gaming tax under Section 125-A by service providers, including accredited service providers, shall be subject to 0% VAT. (Section 7)
Gaming Tax on Offshore Gaming Licensees (Section 8)
- A gaming tax of 5% shall be levied on the entire gross gaming revenue or receipts or the agreed predetermined minimum monthly revenue or receipts, whichever is higher, in lieu of all other direct and indirect internal revenue taxes and local taxes.
- The gaming tax shall be remitted to the BIR by the 20th day of the following month.
- PAGCOR, economic zones, tourism zones, or freeports may impose regulatory fees not exceeding 2% of the gross gaming revenue or receipts or a predetermined minimum guaranteed fee, whichever is higher.
- Gross gaming revenue or receipts means gross wagers less payouts.
- A third-party auditor shall determine the gross gaming revenues or receipts and submit periodic reports to the BIR.
- The third-party auditor shall be independent, reputable, internationally-known, and duly accredited.
- The BIR and COA may conduct post-audits or independent verifications.
Disposition of Revenues from Gaming Tax (Section 9)
- 60% of the total revenue from the gaming tax shall be allocated as follows:
- 60% for the implementation of the Universal Health Care Act
- 20% for the Health Facilities Enhancement Program
- 20% for the attainment of the Sustainable Development Goals
Oversight and Review (Section 10)
- The BIR shall submit a report to Congress every three months, including reports by third-party auditors and collection performance data of offshore gaming licensees, for review and possible adjustment of rates.
Implementing Rules and Regulations (Section 11)
- The Secretary of Finance shall promulgate the necessary rules and regulations for implementation within 90 days after the effectivity of the Act.
Separability Clause (Section 12)
- If any provision is held unconstitutional or invalid, the other provisions shall remain in full force and effect.
Repealing Clause (Section 13)
- All laws, decrees, executive orders, rules and regulations, including PAGCOR Charter, Aurora Special Economic Zone Act, and Bayanihan to Recover as One Act, which are contrary or inconsistent with this Act, are repealed, amended, or modified accordingly.
Effectivity (Section 14)
- The Act shall take effect 15 days after its publication in the Official Gazette or a newspaper of general circulation.