Philippines well placed to become major player in offshore gaming

MANILA, Philippines — The Philippines has the potential to become a major player in the offshore gaming industry worldwide, given the country’s conducive environment for online casino operators, according to state think tank National Tax Research Center (NTRC).

In a report titled “Profile and Taxation of Philippine Offshore Gaming Operations,” the NTRC said the Philippines has several advantages compared to other players in the global online casino business.

The NTRC said offshore gaming is a legal and licensed activity in the country, which ensures that online games are properly regulated and monitored by government agencies. The think tank added the Philippines is known for its low real estate acquisition and operational costs, as well as competitive labor costs as compared to other major Asian cities.

“Filipinos are likewise known to be highly skilled and educated, which makes doing business in the country easier,” the NTRC said.
The country also has plenty of available prime grade buildings located in safe and accessible areas, equipped with high speed fiber optic telecommunication facilities and uninterrupted power supply, making it conducive for 24/7 operations, it added.

The NTRC said the Philippines’ proximity to most Asian countries is an advantage for gamblers from Macau, China, Japan, and Korea, “which makes the country an excellent place to do business.”

“Given the advantages of the Philippines in terms of availability of office space, labor, tax incentives, and technology, it is not farfetched that the country would be a major player in offshore gaming industry worldwide,” the NTRC said.

According to NTRC, the global offshore gaming market is expected to generate revenues exceeding $60 billion by 2020, with Asia Pacific countries surging ahead.

The Philippine Amusement and Gaming Corp. (PAGCOR) was able to collect P11.99 billion from the offshore gaming sector from 2016 to 2018, consisting of P9.47 billion from gaming taxes and P2.52 billion from fees and charges.

“Although considered to be a new gambling activity in the country, offshore gaming is proving to be a promising revenue generating industry. However, the industry has yet to reach its fullest potential and still has enough room for growth and improvement in terms of tax collection, safeguards audit, among others,” the NTRC said.

Meanwhile, the think tank, in a separate study, said the establishment of integrated resorts in the Philippines has contributed to the country’s tourism sector, helping the economy in terms of investments, revenues and job creation.

However, the NTRC has recommended the passage of the Corporate Income Tax and Incentives Rationalization Act, to harmonize the tax incentives system in the country, including those enjoyed by integrated resorts.

There are currently 60 POGO firms that are licensed by PAGCOR. However, the PAGCOR earlier imposed a moratorium on new POGO licenses until such time that issues plaguing the industry are addressed. 

The Bureau of Internal Revenue (BIR) is also monitoring 218 POGO service providers in the country.

Foreign workers in the industry are currently estimated at around 138,000.

The DOF expects to generate about P2 billion in additional revenues a month from the withholding tax of foreign workers in the POGO sector.

PhilStar Global