How Gaming Operations Are Taxed in the Philippines: PAGCOR Fees and Franchise Tax
Understand how gaming operations are taxed in the Philippines, including PAGCOR licence fees, the 5% franchise tax, and the final tax on jackpot winnings.
Gaming operators in the Philippines pay PAGCOR more than a licence fee. Under the Gaming Site Regulatory Manual (Bingo Games) version 3.0 and its 2018 amendments, a bingo operator remits a PAGCOR share of gross sales or gross gaming revenue, plus a 5% franchise tax, while the operator withholds a final tax on player jackpot winnings above Ten Thousand Pesos (PhP10,000.00). The licence itself is a Gaming License issued by PAGCOR, and the manual forms part of its terms.
What fees does a gaming operator pay PAGCOR?
The Gaming Site Regulatory Manual devotes Regulation 4 to Fees and Other Monetary Requirements, covering the types of fees, a table of fees, payment of fees, and a Performance Cash Deposit. The manual defines "fees" simply as the fees payable to PAGCOR pursuant to the License.
The amount of each fee is set out in the manual's Table of Fees, and the Performance Cash Deposit is a separate monetary requirement. Because the figures sit in the manual's schedules rather than in the regulation text, an applicant should work from the current table and the terms of the issued Gaming License.
The 5% franchise tax on gaming revenue
The 2018 amendments to the manual reverted to the pre-RMC 33-2013 set-up and applied a 5% franchise tax on income. The treatment differs by game type.
Electronic bingo (eBingo). The 5% franchise tax is applied to Gross Gaming Revenue (GGR) before sharing between PAGCOR and the Bingo Operator. In effect, both PAGCOR and the Operator pay the 5% franchise tax, and they share 50%-50% on the GGR after deducting the 5% franchise tax. Under the amended formula, Gross Collection less Total Payout (excluding taxes on jackpot prizes above PhP10,000.00) gives GGR; the 5% franchise tax is then deducted to arrive at GGR after franchise tax; and the PAGCOR Share is 50% of that figure. Both the PAGCOR Share and the franchise tax are for remittance to PAGCOR.
Traditional bingo and similar games. For Traditional Bingo, Rapid Bingo, Gaming Arts and Pull Tab Bingo, the 5% franchise tax is likewise applied to GGR, but PAGCOR's 15% share in Gross Ticket Sales (or Gross Sales) is preserved and the franchise tax is shouldered by the Operator. The PAGCOR Share is 15% of Gross Sales; separately, Gross Sales less Total Payout (excluding taxes on jackpot prizes above PhP10,000.00) gives GGR, on which the 5% franchise tax is computed.
The 5% franchise tax on bingo game offerings took effect in the first quarter of 2018, beginning January 1, 2018.
Final tax on player jackpot winnings
Prizes over Ten Thousand Pesos (PhP10,000.00) are subject to a 20% withholding tax, which the Operator withholds and remits to the Bureau of Internal Revenue (BIR).
Following the amendments, the final tax for any single prize of more than PhP10,000.00 is shouldered by the Player, although the Operator may opt to shoulder it. Prizes therefore exclude the applicable taxes, and the total gross amount of prizes as computed likewise excludes them. The Operator, as withholding agent, files the appropriate tax return and remits the total prize taxes for the period covered, and must report to CMED all taxes withheld together with proof of payment within fifteen (15) days from payment or the deadline of payment, whichever comes first.
This change also flows into how payouts are defined. Payouts are now the total amount paid out by the Cashier for redeemed electronic bingo receipts or vouchers excluding the 20% prize tax on jackpot prizes above PhP10,000.00, net of unredeemed receipts or vouchers.
How gross sales and gross gaming revenue are determined
Regulation 21 governs the determination of Gross Sales and Gross Gaming Revenue from gaming sites. Gross Gaming Revenue (GGR) means gross collection less payouts. In electronic bingo operations, "gross collection" means the total cash collected from the electronic bingo machines or the amount reflected in the system-generated report, whichever is higher.
For traditional bingo, the manual sets out how Gross Sales from traditional bingo games is determined, and for electronic bingo, how GGR from electronic bingo games is determined. These definitions matter because the PAGCOR share and the franchise tax are both computed on them.
Remittance and reporting to PAGCOR
Regulation 22 covers Financial Reporting and Remittance Guidelines: computation of the PAGCOR Share, remittance to PAGCOR, the Operator's computation of the PAGCOR Share, proof of remittance, and the Operator's documentation and reporting requirements.
Operators should note that the PAGCOR Share and the franchise tax are both remitted to PAGCOR under the amended formulas. The manual also requires records to be made available to the PAGCOR Monitoring Team, which has access to gaming site premises.
Frequently asked questions
How much is the PAGCOR share for bingo operators? For electronic bingo, the PAGCOR Share is 50% of GGR after the 5% franchise tax. For traditional bingo and similar games, the PAGCOR Share is 15% of Gross Sales.
Who pays the 5% franchise tax on bingo operations? For electronic bingo, both PAGCOR and the Operator pay it, since it is deducted from GGR before the 50-50 sharing. For traditional bingo, Rapid Bingo, Gaming Arts and Pull Tab Bingo, the Operator shoulders it while PAGCOR's 15% share is preserved.
Is the final tax on jackpot winnings deducted from the player's prize? Yes. The final tax on any single prize above PhP10,000.00 is shouldered by the Player, though the Operator may opt to shoulder it. The Operator withholds and remits it to the BIR.
Practical takeaways
- The Gaming License is issued by PAGCOR, and the Gaming Site Regulatory Manual forms part of its terms and conditions.
- Electronic bingo: 5% franchise tax on GGR, then a 50-50 split of the remainder between PAGCOR and the Operator.
- Traditional bingo and similar games: PAGCOR's 15% share of Gross Sales is preserved, and the Operator shoulders the 5% franchise tax on GGR.
- Prizes above PhP10,000.00 carry a 20% final tax, now shouldered by the Player unless the Operator opts otherwise.
- The Operator must report withheld taxes to CMED with proof of payment within fifteen (15) days from payment or its deadline, whichever comes first.
Primary sources
The rules discussed above are drawn from the following issuances, embedded here in full for your reference.
Gaming Site Regulatory Manual ver. 3.0 ( Bingo Games)Open in Law LibraryDownload PDF
PAGCOR Technical Standards for EGMs v1.0Open in Law LibraryDownload PDF
Amendment for Application of Franchise Tax - 04.06.2018Open in Law LibraryDownload PDF
This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.
Related reading
Understand the line between illegal gambling and PAGCOR-regulated gaming in the Philippines, including what makes betting operations lawful.
Electronic billiards in the Philippines is regulated by PAGCOR's E-Billiards framework, which licenses operators, accredits leagues, and registers billiard halls.
How a foreign corporation can obtain an internet gaming licence in the Philippines, including PAGCOR eligibility rules, documentary requirements and the local gaming agent.
Understand franchise tax withholding in the Philippines, from VAT and percentage tax to withholding tax on income payments to franchisors.
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