H. No.

5777
S. No. 2232

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Begun and held in Metro Manila, on Monday, the twenty-sixth

day of July, two thousand twenty-one.

[ REPUBLIC ACT Nol 1590]

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

Be it enacted by the Senate and House of Representatives of the

Philippines in Congress assembled:

SECTION 1. Declaration of Policy. - It is h e r e b y

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
t h a t p r o v i d e a d e q u a t e s o c i a l s e r v i c e s , p r o m o t e full
employment, a rising standard of living, and an improved
quality of life for all. Towards this end, the State shall strictly
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regulate all forms of legal gambling and prohibit all forms of

“For purposes of this Section, an offshore
illegal gambling. While doing so, the State recognizes that
gaming licensee shall be considered engaged in
revenues generated from legal gambling are not a sustainable
doing business in the Philippines.
source of income. The State further recognizes that all forms
of gambling have consequences to Philippine society in general,
and to Filipino families, in particular. The State further “(JJ) The term ‘offshore gaming licensee
reiterates that the recognition of legal forms of gambling, gaming agent’ shall refer to the representative
including offshore online gaming, shall not be construed as a in the Philippines of an offshore-based operator
favorable state endorsement of such activity. who shall act as a resident agent for the mere
purpose of receiving summons, notices a n d
SEfe. 2. Section 22 of the National Internal Revenue other legal processes for the offshore gaming
Code of 1997, as amended, is hereby further amended to licensee a n d to comply w i t h d i s c l o s u r e
read as follows: ‘requirements of the Securities and Exchange
Commission. The offshore gaming licensee
“Sec. 22. Definitions. — When used in this gaming agent shall not be involved with the
Title: business operations of the offshore gaming
licensee and shall derive no income therefrom.”
“x X X
SEC. 3. Section 25 of the National Internal Revenue
Code of 1997, as amended, is hereby further amended to
“(II) The term ‘offshore gaming licensee’ read as follows:
shall refer to the offshore gaming operator,
whether organized abroad or in the Philippines, “Sec. 25. Tax o n N o n r e s i d e n t A l i e n
duly licensed and authorized, through a gaming Individual. -
license, by the Philippine Amusement and Gaming
Corporation or any special economic zone authority “(A) x x x
or tourism zone authority or freeport authority
to conduct offshore gaming operations, including
“(B) x x x
the acceptance of bets from offshore customers,
as provided for in their respective charters.
“(C) x x x
“Notwithstanding any law to the contrary,
no offshore gaming license shall hereinafter be “(D) x x x
issued by the Aurora Pacific Economic Zone and
F r e e p o r t A u t h o r i t y . All offshore g a m i n g “(E) x x x
licensees whose license was issued by the Aurora
Pacific Economic Zone and Freeport Authority “(F) x x x
shall be transferred, regulated, and monitored
by the Philippine A m u s e m e n t a n d G a m i n g “(G) Alien Individuals Employed by a n
Corporation. Offshore G a m i n g Licensee a n d S e r v i c e
Providers. - Alien individuals regardless of
residency and who are employed and assigned
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E x c h a n g e Commission, t h e P h i l i p p i n e
in the Philippines, regardless of term and class
Amusement and Gaming Corporation, and any
of working or employment permit or visa, by a n
special economic zone authority, tourism zone
offshore gaming licensee or its service provider
authority, freeport authority, as provided for
as defined in Section 22(11) and Section 27(G)
in their respective charters, shall issue joint and
of this Code, shall pay a final withholding tax of
consolidated rules and regulations, including the
twenty-five percent (25%) on their gross income
issuance of a gaming employment license by the
a s computed in t h e succeeding p a r a g r a p h :
concerned agency, for the implementation of
Provided, however, That the minimum final
free and efficient exchange of information among
withholding tax due for any taxable month from
the s a i d agencies in relation t o t h e p r o p e r
s id persons shall not be lower than Twelve
payment of taxes by persons covered under this
thousand five hundred pesos (P12,500.00).
Section. For this purpose, the data sharing and
reporting system as well as the joint inspection
“In computing the tax provided in this team created under Joint Memorandum Circular
Section, gross income shall include, whether in No. 1, Series of 2019, entitled, 'Rules a n d
cash or in kind, basic salary/wages, annuities, Procedures Governing Foreign Nationals
compensation, remuneration and other Intending to Work in the Philippines’ shall be
emoluments, such as honoraria and allowances, institutionalized.
received from such service provider or offshore
gaming licensee: Provided, That all offshore
“All foreign employees of offshore gaming
gaming licensees and service providers shall
licensees and their service providers, regardless
submit to the Bureau of Internal Revenue the
of nature of employment, shall have a tax
original copy of n o t a r i z e d c o n t r a c t of
identification number. All offshore gaming
employment clearly stating therein the annual
licensees and service providers that employ or
salary and other benefits and entitlements of
engage a foreign national without the foregoing
the concerned alien.
shall be liable for a fine of Twenty thousand
pesos (P20, 000.00) for every foreign national
“The tax imposed herein shall be withheld without such tax identification number and, in
and remitted in accordance with the provision proper instances, revocation of their primary
of this Code and failure to do so shall be governed and other licenses obtained from government
by this Code. In addition, the alien concerned agencies and/or perpetual or temporary ban in
may be subject to deportation and may be barred employing or engaging foreign nationals for
from reentering the Philippines, or blacklisted their operations: Provided, That the foreign
as a foreign employee by the Department of national concerned shall still pay, and the
Labor and Employment, Bureau of Immigration, employer shall remit, any corresponding taxes,
and other relevant agencies. penalties, interests, and surcharges due in
accordance with this Code.
“For the efficient assessment, verification,
and administration of taxes imposed in this “Any income earned from all other sources
S e c t i o n , the B u r e a u of I m m i g r a t i o n , the within the Philippines by the alien employee
Department of Labor and Employment, the referred to u n d e r this Subsection shall be
Bureau of Internal Revenue, the Securities and
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in Section 27(A) of this Code, and shall be subject

subject to the pertinent income tax imposed
to all other applicable local and national taxes.
under this Code.”

SEC. 4. Section 27 of the National Internal Revenue Code “For purposes of this Section, an accredited
of 1997, as amended, is hereby further amended to read as service provider to an offshore gaming licensee
follows: (‘service provider’) shall be a juridical person that
is duly created or organized within or outside the
“Sec. 27. Rates of Income Tax on Domestic Philippines or a natural person, regardless of
Corporations, - citizenship or residence, which provides ancillary
services to an offshore gaming licensee as defined
“(A) x x x by Section 22(11) of this Code or to any gaming
licensee or operator with licenses from other
“(B) x x x jurisdictions. Such ancillary services may include,
but shall not be limited to, customer and technical
relations and support, information technology,
“(C) x x x
gaming software, d a t a provision, payment
solutions, and live studio and streaming services.”
“(D) x x x
SEC. 5. Section 28 of the National Internal Revenue Code
“(E) x x x of 1997, as amended, is hereby further amended to read as
follows:
“(F) Offshore Gaming Licensees, — The
provisions of existing special or general laws to “Sec. 28. Rates of Income Tax on Foreign
the contrary notwithstanding, the non- gaming Corporations, -
revenues of Philippine-based offshore gaming
licensees as duly licensed by the Philippine “(A) Tax on Resident Foreign
Amusement and Gaming Corporation or any Corporations. -
special economic zone authority or tourism zone
authority or freeport authority shall be subject “(1) x x x
to an income tax equivalent to twenty-five
percent (25%) of the taxable income derived “X X X
during each taxable year from all sources within
and without the Philippines.
“(7) Offshore Gaming Licensees. - The
provisions of existing special or general laws to
“(G) Accredited Service Providers t o the contrary notwithstanding, the non-gaming
Offshore Gaming Licensees, - Unless otherwise revenues derived within the Philippines of
p r o v i d e d in this Code, a c c r e d i t e d s e r v i c e foreign-based offshore gaming licensees as
providers to offshore gaming licensees shall not
defined and duly licensed by the Philippine
be subject to the gaming tax imposed by Section
Amusement and Gaming Corporation or any
125-A but shall pay such rate of tax as imposed
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special economic zone authority or tourism zone X X X

authority or freeport authority shall be subject
to a n income t a x equivalent t o twenty-five “(B) Transactions Subject to Zero Percent
percent (25%) of t h e taxable income derived (0%) Rate. - The following services performed
during each taxable year.” in the Philippines by VAT-registered persons
shall be subject to zero percent (0%) rate:
SEC. 6. Section 106 of the National’ Internal Revenue
Code of 1997, as amended, is hereby amended to read as
“(1) x x x
follows:

v “Sec. 106. Value-Added Tax o n Sale of

Goods or Properties. -
“(9) Services rendered to offshore gaming
“(A) x x x licensees subject to gaming tax under Section
125-A of t h i s Code by service providers,
including accredited service providers as
“(1) X X X
defined in Section 27(G) of this Code.”
“(2) The following sales by VAT-registered SEC. 8. A new section designated as Section 125-A of the
persons shall be subject to zero percent (0%) National Internal Revenue Code of 1997, as amended, is hereby
rate: added to read as follows:

“(a) x x x “Sec. 125-A. Gaming Tax o n Services

Rendered by Offshore Gaming Licensees. - Any
“(b) x x x provision of existing laws, rules or regulations
to the contrary notwithstanding, the entire gross
“(c) Sales to offshore gaming licensees gaming r e v e n u e or r e c e i p t s or the a g r e e d
subject to gaming tax under Section 125-A of predetermined minimum monthly revenue or
this Code. receipts from gaming, whichever is higher, shall
be levied, assessed, and collected a gaming tax
equivalent to five percent (5%), in lieu of all other
“x X X.”
direct and indirect internal revenue taxes and
local taxes, with respect to gaming income:
Sec. 7. Section 108 of the National Internal Revenue
Provided, That the gaming tax shall be directly
Code of 1997, as amended, is hereby amended to read a s
remitted to the Bureau of Internal Revenue not
follows:
later than the 20th day following the end of each
“Sec. 108. Value-Added Tax on Sale of month: Provided, further, That the Philippine
Services and Use or Lease of Properties. - Amusement and Gaming Corporation or any
special economic zone authority or tourism zone
(A) x x x authority or freeport authority may impose
regulatory fees on offshore gaming licensees
which shall not cumulatively exceed two percent
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(2%) of the gross gaining revenue or receipts

SEC. 9. A new Subsection designated as Section 288(G)
derived from gaming operations and similar
of the National Internal Revenue Code of 1997, as amended,
related activities of all offshore gaming licensees
is hereby added to read as follows:
or a predetermined minimum guaranteed fee,
whichever is higher: Provided, furthermore, “Sec. 288. Disposition of Incremental
That for purposes of this Section, gross gaming Revenues. -
revenue or receipts shall mean gross Wagers less
payouts: Provided, finally, That the taking of
“(A) x x x
wagers made in the Philippines and the grave
failure to cooperate with the third-party auditor
sU?.ll result in the revocation of the license of “XXX
the offshore gaming licensee.
“(G) Disposition of R e v e n u e s from
“The Philippine Amusement and Gaming Gaming Tax on Offshore Gaming Licensees. -
C o r p o r a t i o n o r any s p e c i a l economic zone The provisions of existing law to the contrary
authority or tourism zone authority or freeport notwithstanding, sixty percent (60%) of the total
a u t h o r i t y s h a l l e n g a g e t h e s e r v i c e s of a revenue collected from the gaming tax imposed
third-party audit platform that would determine on offshore gaming licensees shall be allocated
the g r o s s g a m i n g r e v e n u e s o r r e c e i p t s of and used exclusively in the following manner:
offshore gaming licensees. To ensure that the
proper taxes and regulatory fees are levied, “(1) S i x t y p e r c e n t (60%) for the
periodic r e p o r t s a b o u t , t h e r e s u l t s of t h e implementation of Republic Act No. 11223,
operation showing, among others, the gross otherwise known as the ‘Universal Health Care
gaming revenue or receipts of each offshore Act’;
g a m i n g l i c e n s e e shall b e s u b m i t t e d to t h e
Bureau of Internal Revenue by the Philippine “(2) T w e n t y p e r c e n t (20%) s h a l l b e
Amusement and Gaming Corporation or any allocated to the Health Facilities Enhancement
special economic zone authority or tourism zone Program (HFEP), the annual requirements of
authority or freeport authority as certified by which shall be determined by the Department
their third-party auditor: Provided, That the of Health; and
t h i r d - p a r t y a u d i t o r shall b e i n d e p e n d e n t ,
reputable, internationally-known, and duly
“(3) T w e n t y p e r c e n t (20%) s h a l l be
accredited as such by an accrediting or similar
allocated for the attainment of the Sustainable
a g e n c y r e c o g n i z e d by i n d u s t r y e x p e r t s :
Development Goals (SDGs): Provided, That
Provided, finally, That nothing herein shall
the specific SDG targets shall be determined
prevent the Bureau of Internal Revenue and the
by the National Economic and Development
Commission o n Audit from u n d e r t a k i n g a
Authority.”
post-audit or independent verification of the
gross g a m i n g r e v e n u e s d e t e r m i n e d by t h e SEC. 10. Oversight a n d Review. - W i t h i n t h r e e (3)
third-party auditor ” months from the effectivity of this Act and every three (3)
months thereafter, the Bureau of Internal Revenue shall
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s u b m i t a r e p o r t t o Congress, c o n t a i n i n g all p e r t i n e n t
information, including but not limited to, reports by the This Act was passed by the House of Representatives
third-party auditors and collection performance data of all as House Bill No. 5777 on February 8, 2021, passed by the
offshore gaming licensees, for review of the same for possible Senate of the Philippines as Senate Bill No. 2232 on June 2,
adjustment of rates or any other matter pertinent to the 2021, and adopted by the House of Representatives as an
amendment to House Bill No. 5777 on
taxation of Philippine Offshore Gaming Operations.
SEC. 11. Implementing Rules and Regulations. - Within
ninety (90) days after the effectivity of this Act, the Secretary
of F i n a n c e s h a l l , u p o n t h e r e c o m m e n d a t i o n of t h e
Commissioner of Internal Revenue, promulgate the necessary MYRA MARIE D. VILLAR1CA Mark Lu .Mendoza
Secretary of the Senate ry Gfyeral
rules Ind regulations for its implementation.
bf Represent tatives
SEC. 12. Separability Clause. - If any provision of this
Act shall be held unconstitutional or invalid, the other
provisions not otherwise affected shall remain in full force Approved: S E P 2 2 2021
and effect.
SEC. 13. Repealing C l a u s e . - All l a w s , d e c r e e s ,
executive orders, rules and regulations or parts thereof,
including Republic Act No. 9487, otherwise known as “PAGCOR
Charter”, Section 12(f) of Republic Act No. 9490 as amended RODRIGO ROADUTERTE
by Republic Act No. 10083, otherwise known as the "Aurora President of the Philippines
Special Economic Zone Act of 2007”, and Republic Act No.
11494, otherwise known as the “Bayanihan to Recover As
One Act”, which are contrary to or inconsistent with this Act o
are hereby repealed, amended or modified accordingly.
SEC. 14. Effectivity. - T h i s Act s h a l l t a k e effect
fifteen (15) days after its publication in the Official Gazette REPUBLIC OF the PHILIPPINES
or in a newspaper of general circulation. PRRD 2016 - 018689

Approved,
Girke of
MAlACA&AftG RECORDS OfflCE

VICENTE C. OTTO in LORDJ

le Senate Speal of the House
« of Representatives