Pagcor License Fees
POGO In The Philippines
The Philippine Offshore GamingOperations (POGO) has been a major contributor to the Philippine economy sinceits entry to the country sometime in 2003. Since then, more and more foreigncompanies and entities are entering the Philippines to get a slice of thelucrative offshore gaming market. As the number of POGOs increase, regulatingthem has been a problem, thus, the Philippine government has tasked thePhilippine Amusement and Gaming Corporation (PAGCOR) with the mainresponsibility of regulating and the registration of POGOs. There are alsoother regional gambling regulators which the Philippine government allows toissue offshore gaming licenses like Cagayan Economic Zone Authority(CEZA), Aurora Pacific Economic Zone & Freeport Authority (APECO), andAuthority of the Freeport Area of Bataan (AFAB).
In this article, you will learn about the different classifications of POGOs, their applications processes and the taxes that they are subjected to in the Philippines.
TWO (2) DIFFERENT CLASSIFICATIONS OF POGO OPERATORS
- Philippine-based Operator – Philippine-based Operator refers to a duly constituted business corporation organized in the Philippines who will either conduct offshore gaming operations themselves or engage the services of PAGCOR-accredited service providers
- The PAGCOR official assured that POGOs that are not compliant with the tax laws of the country will not be allowed to resume business. 'Yung mga hindi nagbayad ng BIR taxes at walangcertification of registration, at saka ay hindi pa fully paid as of March 2020, hindi namin sila hahayaan magbukas, kailangan bayad lahat ng taxes nila,' she said.
- Under the Provisional License, upon commencement of operations, the Provisional Licensees are required to remit to PAGCOR, on a monthly basis, license fees equal to: a) 15.0% of casino revenues generated from High Roller tables (as defined in the Provisional License).
- It’s a notoriously tough process to obtain a PAGCOR licence. There is an initial $40,000 application fee plus a $48,000 fee for the first year once approved. Licences can then be renewed subject to meeting the criteria at a cost of $60,000 per year. Any successful casino applicants will then be added to the central PAGCOR licence list.
- In 2014, Pagcor temporarily reduced the licence fees that private sector casino operators had to pay by a factor of 10 percent. The new head of Pagcor, Andrea Domingo, confirmed to the Manila Bulletin that the regulator has already notified the casino operators of its latest decision.
Types of Licenses Offered by The Philippines Gambling Commission. There are only a few licenses that are offered by the Philippines Gambling Commission (The PAGCOR). Here are the licenses that they offer, along with some of the fees associated with them: Offshore Gaming License. Application and PROCESSING FEES (Onetime fee) e-Casino:USD 50,000.00.
- A Foreign-based Operator refers to a duly constituted business corporation organized in any foreign country who will engage the services of a PAGCOR-accredited local gaming agent and service providers for its offshore gaming operations.
WHAT IS THE PROCESS FLOW FOR APPLICATIONS FOR PHILIPPINE-BASED OPERATOR?
- Submissionof Letter of Intent addressed to the PAGCOR Chairman and CEO.
- AcknowledgesLetter of Intent and initial evaluation of applications
- Issuance of Deposit Notice and Payment Form forpayment of application and processing fee
- Uponpayment, Applicant MUST submit copy of proof of payment of the application andprocessing fees and secure clearance from FOCAS-OGLD
- Uponreceipt of the proof of payment, LD-OGLD will issue a pre-numbered applicationkit and table of checklist of documentary requirements
- Submissionof complete documentary requirements (MUST be accomplished within 3 months fromissuance of a pre-numbered application kit)
- Finalreview, recommendation and endorsement of applications to the AVP, OGLD
- BoardApproval
- Noticeof Approval to the applicant
- Paymentof License Fee/s, Performance Bond Fee and Permit to Possess Fee
- Issuanceof License to Philippine-based Operator
WHAT IS THE OFFSHORE GAMING LICENSE?
An Offshore Gaming License (OGL)is an authority granted by PAGCOR to Philippine Offshore Gaming Operators forthe establishment, maintenance and the conduct of offshore gaming operations ina specific site within the jurisdiction of PAGCOR.
No operator shall be allowed to conduct offshore gaming operations without a valid OGL evidenced by a certificate issued by the OGLD
WHAT ARE THE THREE (3) TYPES OF OFFSHORE GAMING LICENSES?
A. E-casino – refers to an OGL for the operation of Live CasinoGames or Random Number Generator (RNG) based games.
B. Sportsbetting – refers to an OGL for the acceptance and/orfacilitation of wagers in the operation of predicting the outcome and resultsof a sporting event.
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C. Sportsbetting on Regulated Wagering Events
WHAT ARE THE TAXES THAT POGOs ARE SUBJECTED TO?
Like any other person or entity doing business in the Philippines, POGOs are subjected to Philippine taxes. Pursuant Bureau of Internal Revenue (BIR) Revenue Memorandum Circular No. 102-2017 POGOs are subjected to the following taxes:
- INCOMETAX –
- Incomefrom Gaming Operations, which refer to income or earning realized orderived from operating of gambling casinos, gambling clubs and other similarrecreation and amusement places and gambling pools.
- Incomefrom Other Related Services, which refers to income or earning realized orderived not from gaming operations but from such other necessary and relatedservices, shows and entertainment.
- VALUE-ADDEDTAX
- Income from Other Related Services from non-gaming operations shall be subject to normal income tax, value-added tax, and other applicable taxes, as may be deemed appropriate.
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- FRANCHISETAX
- The entire gross gaming receipts/earnings or the agreed or pre-determined minimum monthly revenues/income from Gaming Operations under existing rules, whichever is higher, shall be subject to a franchise tax of five percent (5%), in lieu of all kinds taxes, levies, fees or assessments of any kind, nature or description, This income is therefore exempt from any kind of tax, income or otherwise, as well as fees, charges or levies of whatever nature, whether national or local.
- A Licensee deriving income from both gamingoperations and from other related services shall be subjected to 5% franchise tax on its gaming revenues and normalincome tax, value-added tax and other applicable taxes on its non-gamingrevenues.
- An Other Entity, specifically including thegaming agent, Service Provider and Gaming Support Provider who is also a POGOLicensee shall be taxed 5% Franchise tax on its gaming activities and subjectto normal tax rate and other appropriate taxes on its non-gaming operations.
Pagcor License Fees
- WITHHOLDINGTAXES
- Income payments made by POGO Licensees or any other business entity licensed or authorized by PAGCOR for all their purchases of goods and services shall be subject to withholding taxes as may be appropriate and applicable.
- Compensation, fees, and commissions or any other form of remuneration as a result of services rendered to POGO Licensees or any other business entity licensed by PAGCOR shall be subject to applicable withholding taxes under existing revenue laws and regulations.
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Written by: Atty. Jon Dominic Peñaranda