CHANGING WINDS Chinese gaming firm employees await their shuttle services in Pasay City last year. —INQUIRER FILE PHOTO
Five years after he declared a “new springtime” in ties with China, President Duterte himself signed into law a new tax on Philippine offshore gaming operators that will likely foreshadow a new winter in bilateral relations with the second strongest economy in the world.
Republic Act No. 11590, signed by Duterte on Wednesday, amended the National Internal Revenue Code (NIRC) to impose an income tax equivalent to 25 percent of the taxable income that an offshore gaming licensee derived during each taxable year from all sources within and without the Philippines.
Sales to offshore gaming licensees will also be subject to a 5-percent gaming tax in accordance with a new section inserted in the NIRC by the new law.
The gaming tax shall be “in lieu of all other direct and indirect internal revenue taxes and local taxes, with respect to the gaming income.”
However, such sales, as well as services rendered the license-holders, will no longer be subject to value-added tax.
According to the new law, 60 percent of the revenues derived from the taxes shall fund the Universal Health Care Act, the Department of Health’s health facilities enhancement program, and the fulfillment of Sustainable Development Goals as determined by the National Economic and Development Authority.
Meanwhile, accredited service providers of offshore gaming operators, which provide “ancillary services” such as customer and technical relations and support; information technology; gaming software; data provision; payment solutions; and live audio and streaming services shall not pay gaming taxes but will be subject to corporate tax and all applicable local and national taxes.
The law also authorized the Philippine Games and Amusement Corp. and other special economic zone or tourism zone authority to impose on all offshore gaming licensee regulatory fees not more than 2-percent of their gross gaming revenue or receipts derived from gaming operations and similar activities, whichever is higher.
Foreigners employed by the licensed offshore gaming firms and accredited service providers shall pay a final 25-percent withholding tax on their gross income.
RA 11590 also authorized the Bureau of Immigration, the Department of Labor and Employment, the Bureau of Internal Revenue, and the Securities and Exchange Commission to issue guidelines on the issuance of employment permits and worksite inspections.
All foreign employees will now be required to have a tax identification number (TIN).
Offshore gaming firms and service providers shall be fined P20,000 for every foreign employee caught without a TIN.