The Bureau of Internal Revenue (BIR) in the Philippines is expected to collect up to PHP20 billion ($352 million) from franchise tax collection as electronic games (e-games) continue their upward growth.
During a recent Senate committee meeting, both the Department of Finance (DOF) and the Philippine Amusement and Gaming Corporation (PAGCOR) confirmed the increasing trend in the e-games sector.
Finance Assistant Secretary Karlo Adriano stated that the BIR could collect between PHP15 billion ($264 million) to PHP20 billion ($352 million) from the five percent franchise tax on PAGCOR’s e-games licensees.
This represents a 13 to 50 percent increase from last year’s collection of PHP13.3 billion ($234 million). From January to July, franchise tax collection from e-games had already reached PHP10.7 billion ($188 million).
Income from gaming operations, including e-games, is subject to a five-percent franchise tax, which is paid directly to the BIR. This franchise tax is separate from other license and regulatory fees that operators pay to PAGCOR.
The rise in tax revenue from e-games is attributed to the sector’s growth, driven by technological advancements in the local gambling industry. PAGCOR chairman Alejandro Tengco described e-games as a “sunrise industry” that could shape the future of gaming, especially since many jurisdictions globally are legalizing online gaming.
Tengco noted that most large land-based casino operators in the United States and Canada now have online gaming operations. “E-games affect land-based casinos, which is why integrated resorts (IRs) are also joining the trend,” Tengco said.
Despite the growing potential of e-games, Tengco emphasized that traditional casinos are here to stay. “IRs both here and abroad will remain because people still seek personal experiences. These resorts are also going online to protect their customer base,” he added.
For 2024, PAGCOR expects e-games to contribute 35 percent of its total revenue, surpassing the PHP100-billion ($1.76 billion) mark for the first time.
Senate committee on ways and means chair Senator Sherwin Gatchalian mentioned that e-games could more than compensate for the revenue losses from the closure of Philippine Offshore Gaming Operators (POGOs).
PAGCOR also opposed the proposed anti-online gambling act suggested by Senators Alan Peter Cayetano and Joel Villanueva. “If we don’t regulate them, they will just continue to operate. It’s better to regulate properly and generate revenue for PAGCOR, which we, in turn, give back to the country,” Tengco argued.
PAGCOR’s E-Games Licensing Department now oversees traditional bingo games, e-bingo, e-casino, sports betting, online poker games, and specialty games. As of mid-August, 45 licensed gaming system service providers offer e-games. Some of the most popular include Bingo Plus, Solaire Online, OKBet, InstaWin, Sports Plus, Okada Online Casino, Arena Plus, Gamezone, and Bet88.
PAGCOR data also revealed that 22 additional providers have yet to begin commercial operations.
