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BIR Anticipates Up to P20 Billion in Franchise Tax Revenue from E-Games

September 13, 2024 Philippines Crime & Legal

PAGCOR head explains why he is opposed to the proposed anti-online gambling act.

The Bureau of Internal Revenue (BIR) is projected to collect between P15 billion and P20 billion in franchise taxes from the booming electronic games (e-games) sector. This forecast was presented during the September 12, 2024 Senate committee on ways and means hearing. Officials from the Department of Finance (DOF) and the Philippine Amusement and Gaming Corp. (PAGCOR) confirmed the sector’s growth.

Finance Assistant Secretary Karlo Adriano revealed that BIR could collect P15 billion to P20 billion from the five percent franchise tax on PAGCOR e-games licensees. This estimate represents a significant increase of 13 to 50 percent from last year’s P13.3 billion collection. For the first seven months of 2024, the BIR has already gathered P10.7 billion from e-games franchise taxes.

E-games are subject to a five percent franchise tax, which is payable directly to the BIR. This tax is separate from other fees related to licensing and regulation, which are paid to PAGCOR.

PAGCOR Chairman Alejandro Tengco emphasized the growing significance of e-games within the gaming sector, describing it as a burgeoning field with potential to shape the future of the industry. He observed that with a global trend towards legalizing online gaming, e-games are becoming increasingly prominent. Tengco also noted that numerous major casinos in the U.S. and Canada have begun integrating online gaming into their business models.

Despite the growth of e-games, Tengco emphasized that traditional casinos will continue to be relevant. “IRs [integrated resorts] here and abroad will not be gone because people would want to go for the personal experience. IRs are also going online to protect their customer base,” he was quoted as saying in a report published by the Philippine Star.

For 2024, PAGCOR anticipates that e-games will make up 35 percent of its total revenue, potentially exceeding P100 billion for the first time. Senate committee on ways and means chair Sen. Sherwin Gatchalian suggested that e-games could compensate for revenue losses from the closure of Philippine offshore gaming operators (POGOs).

PAGCOR has opposed the proposed anti-online gambling act from Senators Alan Peter Cayetano and Joel Villanueva. Tengco argued, “If we don’t regulate them, they will just continue to operate. Might as well regulate it properly and generate revenue for PAGCOR, which we also give back to the country.”

PAGCOR’s E-Games Licensing Department oversees various forms of online gaming, including bingo games, e-bingo, e-casino, sports betting, online poker, and specialty games. As of mid-August, there are 45 licensed gaming system service providers in the e-games sector, with notable names including Bingo Plus, Solaire Online, and OKBet. An additional 22 providers are expected to begin operations soon.

Read related article: PAGCOR Forecasts Casino Sector Revenues Will Reach P275 Billion by Year-end

 

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