Highlights of Revenue Memorandum Circular No.

102-2017

BIR issued RMC 102-2017 to clarify the taxability of POGO and its gaming components.

Companies/Persons who are engaged in the business of offshore gaming operations, including their
agents and components shall comply with the following:

1/ Register the business with the BIR.

2/ File applicable tax returns, submit information returns, and pay correct taxes before the due dates.
3/ Keep books of accounts and other business/accounting records, and have it available for inspection
and verification by authorized BIR offices.

The BIR classifies POGO taxpayers as follows:

1/ Licensee – a POGO (Philippine-based or Offshore-based) duly licensed and authorized by PAGCOR to

provide offshore gaming services.
2/ Other Entity – any Business duly licensed by PAGCOR to provide a particular component of the offshore
gaming activities to the POGO. Other Entity may be:
a/ POGO Gaming Agent (Representative)
b/ Service Provider – can be Gaming Software Provider, or a BPO, or a Data/Content Streaming
Provider
c/ Gaming Support Provider

The income of POGO are classified as follows:

1/ Income from gaming operations

2/ Income from Other Related Services – this refers to income earned not from gaming operations but
from other activities such as shows and entertainment.

The operations of POGO shall be taxed as follows:

1/ Income from gaming operations shall be subject to franchise tax at 5% based on the gross gaming
receipts or pre-determined monthly revenues whichever is higher.

The franchise tax (5%) is in lieu of all kinds of taxes, levies, fees or assessment. No other taxes of whatever
nature shall be paid to the BIR.

2/ Income from Other Related Services (not from gaming operations) shall be subject to:
a/ Normal Corporate Income Tax (30% on the Net Income)
b/ Value-added Tax (12% on the Sales)
c/ Other taxes, as applicable
Income from Other Related Services shall not be subject to 5% Franchise tax anymore.

Obligations of POGO Licenses as Withholding Tax Agent

a/ Payments of POGO Licensees for all their purchases of goods and services shall be subject to
withholding taxes, as applicable.

b/ Payments of POGO Licensees for services rendered, in the form of Compensation, Fees, Commissions,
shall be subject to withholding taxes, as applicable.

The operations of Other Entity shall be taxed as follows:

1/If the Other Entity is also a POGO Licensee, its income on gaming activities shall be taxed at 5% Franchise
tax. All its income from non-gaming entity shall be subject to Normal Income Tax (30%), Value-added Tax
(12%) and other taxes as applicable.

2/ If the Other Entity is not a POGO Licensee, all its income, whether derived from gaming or non-gaming
activities, shall be subject to Normal Income Tax (30%), Value-added Tax (12%) and other taxes as
applicable.

3/ Other Entity shall also a Withholding Tax Agent, as described above.

Here is the provision of law that grants PACGOR and its Licensees exemptions from all taxes other than
the 5% Franchise Fee.

Presidential Decree No. 1869, s. 1983

“SEC. 13. Exemptions. –

xxx

(2) Income and other taxes. —

(a) Franchise Holder: No tax of any kind or form, income or otherwise, as well as fees, charges or levies of
whatever nature, whether National or Local, shall be assessed and collected under this Franchise from the
Corporation; nor shall any form of tax or charge attach in any way to the earnings of the Corporation,
except a Franchise Tax of five (5%) percent of the gross revenue or earnings derived by the Corporation
from its operation under this Franchise. Such tax shall be due and payable quarterly to the National
Government and shall be in lieu of all kinds of taxes, levies, fees or assessments of any kind, nature or
description, levied, established or collected by any municipal, provincial, or national government
authority.

(b) Others: The exemptions herein granted for earnings derived from the operations conducted under the
franchise specifically from the payment of any tax, income or otherwise, as well as any form of charges,
fees or levies, shall inure to the benefit of and extend to corporation(s), association(s), agency(ies), or
individual(s) with whom the Corporation or operator has any contractual relationship in connection with
the operations of the casino(s) authorized to be conducted under this Franchise and to those receiving
compensation or other remuneration from the Corporation or operator as a result of essential facilities
furnished and/or technical services rendered to the Corporation or operator.

The fee or remuneration of foreign entertainers contracted by the Corporation or operator in pursuance
of this provision shall be free of any tax.”