Philippines President approves additional taxes targeting offshore gaming operators

Philippine President Rodrigo Duterte has signed a new law that taxes China-centric online casinos, announced spokesman Harry Roque at a televised briefing last Thursday. The collected taxes are set to be used for universal healthcare and to develop medical facilities, reports Bloomberg.

In the briefing, Roque further added that the law, which targets operators that mainly cater to Chinese clients, is part of the government’s efforts to regulate all forms of gambling in the country.

The new bill, designated by Duterte as “urgent”, states offshore gaming operators must pay 5% tax on their gross gaming revenue. Moreover, foreigners employed in online casinos and their service providers are required to pay 25% income tax.

The new tax regime targets foreigners working for Philippine Offshore Gaming Operators (POGOs) “regardless of term and class of working or employment permit or visa”. Additionally, non-gaming revenues of Philippine-based offshore gaming licenses shall be subject to an income tax of 25%.

Out of all total revenue collected via the new gaming taxes, 60% will be destined for the universal health care program; 20% for the enhancement of medical facilities; and 20% for “sustainable development goals.”

However, the law says the government does not consider revenues from gambling a “sustainable source of income”, reports ABS-CBN News. “The State further recognizes that all forms of gambling have consequences to Philippine society in general, and to Filipino families in particular,” reads the bill. In consequence, the recognition of legal forms of gambling “shall not be construed as favorable state endorsement.”

POGOs were suspended in 2020, along with other non-essential businesses, amid pandemic-related measures. Critics of their reopening cite alleged crimes linked to the industry, including bribery for the entry of Chinese workers, money laundering and tax violations.

The government’s ongoing efforts to regulate their operations have led to the total number of POGOs in the country to reduce to half, as many have moved operations to other countries, said a Philippine Amusement and Gaming Corporation official last month.

New gambling regulations in Philippines have seen President Duterte greenlighting casino operations in the top tourist island Boracay, which currently counts with no such venues operating. The decision follows government efforts to increase funds for Covid-19 response. Duterte's decision to lift the ban on new casino developments sees the President shifting opinion, as he previously imposed a moratorium and halted resort developments in the country.