RMC No. 107-2021: Circularizes Republic Act No. 11590 titled “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”

Key points

1. Gaming tax. New Section 125-A imposes a gaming tax of five percent (5%) on the entire gross gaming revenue or receipts, or the agreed predetermined minimum monthly revenue, whichever is higher. It is in lieu of all other direct and indirect internal revenue and local taxes on gaming income, and is remitted to the BIR not later than the 20th day after each month.
2. Alien employees. Section 25(G) sets a final withholding tax of twenty-five percent (25%) on the gross income of alien individuals employed by an offshore gaming licensee or its service provider, with a minimum of ₱12,500.00 per taxable month. These employees must have a tax identification number, and the employer is fined ₱20,000.00 for each foreign national without one.
3. Income tax rates. Non-gaming revenues of Philippine-based offshore gaming licensees are taxed at twenty-five percent (25%) under Section 27(F), and the same rate applies to foreign-based licensees under Section 28(A)(7). Accredited service providers pay the Section 27(A) rate and are not subject to the gaming tax.
4. Zero-rated VAT. Sales of goods to offshore gaming licensees subject to the Section 125-A gaming tax, and services rendered to them by service providers, are subject to zero percent (0%) VAT under Sections 106 and 108.
5. Use of revenues. Under Section 288(G), sixty percent (60%) of the gaming tax collected is allocated as follows: 60% for the Universal Health Care Act (RA No. 11223), 20% for the Health Facilities Enhancement Program, and 20% for the Sustainable Development Goals.
6. Oversight and implementation. A third-party auditor determines gross gaming revenues, and the BIR reports to Congress within three (3) months from effectivity and every three (3) months after. The Secretary of Finance issues rules within ninety (90) days after effectivity.

Who is affected

• Offshore gaming licensees
• Accredited service providers to offshore gaming licensees
• Alien individuals employed by offshore gaming licensees and service providers

Deadlines and effectivity

• Gaming tax remitted by the 20th day after each month end
• BIR report to Congress every three (3) months
• Rules due within ninety (90) days after effectivity