REVENUE MEMORANDUM CIRCULAR NO. 132-2024 issued on December 8, 2024, further clarifies the tax treatment of the Philippine Amusement and Gaming Corporation (PAGCOR), its Licensees and Contractees.

Income from operations under PAGCOR’s franchise/gaming operations refers to income derived from issuing and/or granting the license to operate casinos, gaming clubs and other similar recreation or amusement places, gaming pools, i.e., basketball, football, bingo, etc. except jai-alai, whether on land or sea, within the territorial jurisdiction of the Republic of the Philippines; to PAGCOR’s Contractees and Licensees, as well as earnings derived by PAGCOR from its own operations under its franchise (Sections 10 and 13(2) of Presidential Decree (PD) No. 1869). This includes, among others:

(a) Income from its casino operations

(b) Income from dollar pit operations;

(c) Income from regular bingo operations; and,

(d) Income from mobile bingo operations operated by it, with agents on commission basis. Provided, however, that the agents’ commission income shall be subject to regular Income Tax, and consequently, to Withholding Tax under existing

The above income is subject to five percent (5%) Franchise Tax under PD No. 1869, as amended, in lieu of all taxes of any kind or form, as well as fees, charges or levies of whatever nature, which necessarily include Corporate Income Tax and Value-Added Tax (VAT).

Considering that the “gaming operations” include granting of licenses to operate casinos, gaming clubs and etc., regulatory/license fees received by PAGCOR from its Licensees shall be considered income from PAGCOR’s operations under its franchise or gaming operations subject to five percent (5%) Franchise Tax, in lieu of all other taxes, including VAT.

PAGCOR’s income from other related services/operations or from non-gaming operations, such as, but not limited to, income from operating necessary and related services, shows and entertainment are subject to Corporate Income Tax pursuant to Section 14(5) of PD No. 1869 which provides that income derived by PAGCOR from “other related services” shall not be included as part of the income of PAGCOR for the purpose of applying the Franchise Tax, but the same shall be considered as a separate income of PAGCOR and shall be subject to Income Tax. This shall also be subject to VAT under the National Internal Revenue Code of 1997, as amended (Tax Code).

PAGCOR must also collect a qualifying fee from players and remit the same in accordance with Executive Order No. 48, series of 1993, Revenue Regulations No. 06-1993 and Revenue Memorandum Order No. 14-1993. Pursuant to the mentioned law and revenue issuances, PAGCOR shall issue a check, payable to the Bureau of Treasury and to the credit of the account of the BIR, equivalent to the amount of collections for a particular week. This check, together with the necessary supporting documents prescribed by the BIR, shall be issued to the Bureau of Treasury not later than Tuesday following each week. The Bureau of Treasury shall then prepare monthly the corresponding journal voucher and any other necessary documents in favor of the BIR for the latter to record the amount of collections in its book of accounts.

PAGCOR shall file an annual report with the BIR Office having jurisdiction over it within thirty (30) days after the close of the taxable year, summarizing all qualifying fees it has collected from its players for the taxable period.

Income received by: (1) PAGCOR from its gaming operations; and (2) PAGCOR’s Contractees and Licensees from their gaming operations, is subject to five percent (5%) Franchise Tax, in lieu of all other national and local taxes, including indirect taxes such as VAT.

On the other hand, income derived by PAGCOR, its Licensees and Contractees from other related services/operations or from non-gaming operations shall be subject to Corporate Income Tax and VAT.

In terms of tax treatment of PAGCOR’s Licensees located in Ecozones/Freeports, their income realized from gaming operations shall not be subject to the Special Corporate Income Tax (SCIT), Income Tax Holiday (ITH), or Corporate Income Tax but remains subject to five percent (5%) Franchise Tax, in lieu of all other taxes, including VAT, in accordance with PD No. 1869, as amended, and the aforecited jurisprudence.

For other related services/operations, or non-gaming operations, that are covered by their registered activity with the concerned Investment Promotion Agency (IPA), below is their tax treatment.

a. If PAGCOR’s Licensee is under the five percent (5%) SCIT, such income shall be exempt from regular Corporate Income Tax and VAT.

b. If PAGCOR’s Licensee is under the ITH, such income shall be exempt from Corporate Income Tax. The same, however, shall be subject to VAT.

Income received by PAGCOR Licensees from other related services/operations or from non- gaming operations that are not covered by their registered activity with the concerned IPA shall be subject to regular Corporate Income Tax, VAT and other applicable taxes under the Tax Code.

PAGCOR’s Licensees/Contractees shall remit the five percent (5%) Franchise Tax to the BIR and shall be made directly to the Revenue District Office where the licensee or contractee is registered. The licensee and contractee shall remit the Franchise Tax to the BIR using BIR Form No. 2553 indicating the Alphanumeric Tax Code OT 010.

License fees are different and distinct from Franchise Tax. The license fee is being paid by virtue of the license entered into by and between the licensees and PAGCOR based on the aggregate gross gaming revenue. Said fee is the consideration for the authority granted by PAGCOR to its licensees to establish and operate a casino. On the other hand, the five percent (5%) Franchise Tax is the tax incentive provided to PAGCOR and its licensees and contractees for its income from gaming operations, which is properly collected by and within the jurisdiction of the BIR and concerned Local Government Units pursuant to Department of Finance Department Order No. 03-08 issued on February 13, 2008.

This Circular shall apply prospectively.