Revisiting Taxation of onshore and offshore POGOs

Revisiting Taxation of onshore and offshore POGOs

By: Laurice Claire C. Penamente


News reports have sparked renewed public interest in Philippine Offshore Gaming Operators (POGOs) and have raised questions on the applicable tax compliance requirements and tax regime for POGOs.

revisiting taxation of onshore and offshore pogos

POGOs, based onshore or offshore, are entities duly licensed by the Philippine Amusement and Gaming Corporation (PAGCOR) to provide and participate in offshore gaming services.  In the case of offshore or foreign-based POGOs, they are licensed to engage the services of PAGCOR-accredited service providers for online gaming activities.

The tax authorities have previously issued rules on the taxation of POGOs.  

In 2017, the BIR issued Revenue Memorandum Circular (RMC) No. 102-17 clarifying the classification and applicable taxes for POGOs and their service providers.

Under RMC No. 102-17, POGO taxpayers can either be a Licensee or Other Entity.  A Licensee refers to a POGO duly licensed and authorized by PAGCOR to provide offshore gaming services.  On the other hand, Other Entity refers to a POGO Licensee or any other business entity duly licensed and authorized by PAGCOR to provide a particular or specific component of the offshore gaming activities to the POGO.

Regardless of the classification, the income of POGO from gaming activities are subject to five percent (5%) franchise tax.  Income from gaming activities means gross gaming receipts/earnings, or the agreed or pre-determined minimum monthly revenues or income from gaming operations, whichever is higher.  The 5% franchise tax is in lieu of all other taxes.

Income of POGO from non-gaming operations, on the other hand, are subject to the normal income tax, value added tax and other applicable taxes. 

If the Licensee or Other Entity derives income from gaming and non-gaming operations, income from gaming operations shall be subject to the 5% franchise tax whereas income from non-gaming activities will be subject to the normal income tax, value added tax, and other applicable taxes.

RMC No. 102-17 also required POGOs to file applicable tax returns and information returns on or before their due dates, pay the correct internal revenue taxes, keep books of accounts and other accounting or business records, and register the business at the Revenue District Office (RDO) of the BIR having jurisdiction over their principal place of business or head office.

On the registration of POGOs with the BIR, the BIR issued RMC No. 078-18 in 2018 providing guidelines on the registration requirements of POGOs and their service providers.  Under the RMC, POGOs and service providers are required to register with the BIR on or before the commencement of business, before payment of any tax due, or before or upon filing of any applicable tax return, statement or declaration as required by the Tax Code, as amended, whichever comes earlier.  The RMC defined commencement of business as thirty (30) days from the first sale transaction or from issuance of the Mayor’s Permit/Professional Tax Receipt by the local government or issuance of the Securities and Exchange Commission of the Certificate of Registration, whichever comes earlier.

In an interesting development, there is an initiative in the House of Representatives to introduce the five percent (5%) franchise tax on POGOs into the Tax Code.  This is because currently, the 5% franchise tax is not mentioned in the Tax Code and the basis for imposing the same is the franchise granted to POGOs.  The House Bill, House Bill No. 5267, also seeks to introduce a specific tax rate for alien individuals employed and assigned by offshore POGOs to the Philippines.  

Laurice Claire C. Penamente is an Assistant Manager from the Tax Group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice and Tier 1 transfer pricing practice by the International Tax Review.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

The views and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or KPMG RGM&Co. For comments or inquiries, please email or

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