BIR Form 2307 for Internet Cafes, Gaming Lounges, and Billiard Halls

A company that books an internet cafe, gaming lounge, or billiard hall for a corporate event — a team-building outing, a product launch, a client appreciation night — is paying for a service, withheld at a flat 2% under RR No. 2-98, Section 2.57.2(E). A sub-operator or concessionaire that instead pays the venue operator a percentage-of-sales fee for a defined section of floor space is paying rent, withheld at 5% under Section 2.57.2(B). An individual gamer or pool player paying by the hour for personal recreation triggers no withholding at all.

This guide is part of the BIR Form 2307 series. It covers who withholds on a payment to a gaming venue, the 2% rate on a corporate event or team-building booking, the 5% rate when a sub-operator pays percentage-of-sales concession rent for defined floor space, the applicable ATC codes, and worked examples for both.

Who withholds on a payment to a gaming venue? #

Withholding only attaches when the payor itself is a business — a corporation, or an individual engaged in trade or business paying in the course of that business — not when an individual pays for personal recreation. RR No. 2-98 frames the withholding-agent test around the payor’s own status, the same test this series applies to salons, car washes, and parking operators:

“(A) In general, any juridical person, whether or not engaged in trade or business; (B) An individual, with respect to payments made in connection with his trade or business…”

— RR No. 2-98, Section 2.57.3(A)–(B)

A company renting out a gaming lounge for a corporate event, a food-and-beverage concessionaire paying rent for a counter inside a billiard hall, or a business contracting an internet cafe for a product demo is a withholding agent under this test. An individual customer who walks in and pays per hour to play pool, use a console, or browse the internet is not, in that transaction, a withholding agent at all — see the walk-in scenario further down.

Corporate bookings and events: the 2% general services rate #

A business client that pays an internet cafe, gaming lounge, or billiard hall a package fee to host an event — not to lease a defined space on an ongoing basis — generally withholds 2% on the full billing under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018, the same general contractor/business-services bracket this series applies to car washes, auto repair shops, and event suppliers. Typical arrangements that fall here include:

• A company booking a gaming lounge’s consoles, VR stations, and staff for a half-day team-building event
• A corporate client paying a billiard hall a flat fee to reserve all its tables and run a company tournament
• A business contracting an internet cafe to set up and staff computer stations for a one-time training session or product demo

In each case, the venue is paid as a business entity providing bundled equipment, space, and staff for a defined event — not as a landlord leasing a fixed section of its floor to the paying company on an ongoing basis — which is why it sits in the same general-services bracket this series covers for outsourced contractor work in BIR Form 2307 for Contractors and Subcontractors.

Concession and sub-lease arrangements: when the 5% rental rate applies instead #

Some internet cafes, gaming lounges, and billiard halls sublet a defined corner of their floor to a separate operator — a snack counter, a phone-repair kiosk, a separate arcade-machine concession — and collect rent computed as a percentage of that sub-operator’s sales rather than a fixed peso amount. Whether that payment is a 2% service fee or a 5% rental turns on the same beneficial-use-and-control test this series applies to reserved parking slots:

“5% EWT — On gross rental for the continued use or possession of real property used in business which the payor or obligor has not taken or is not taking title, or in which he has no equity.” — RR No. 2-98, Section 2.57.2(B), as amended by RR No. 11-2018

• If the venue operator assigns the sub-operator a specific, identifiable section of floor space for its counter or stand, with the sub-operator controlling that space and running its own business from it, the payment the venue operator collects is rent for real property — even when the agreement computes that rent as a percentage of the sub-operator’s monthly sales rather than a flat peso figure. The percentage only sets the amount; it doesn’t change what’s actually being paid for.
• If instead the venue simply pays an outside party by the job to staff a counter it owns and runs itself — with no defined space handed over to that party’s control — that payment functions as a service fee rather than rent, and falls back to the 2% bracket covered above.

Because this is a sub-lease relationship, the sub-operator paying the rent is the withholding agent, not the venue operator receiving it — the same direction of withholding this series applies to an independent stylist renting a salon chair in BIR Form 2307 for Barbershops, Salons, and Spas and to a tenant leasing reserved parking slots in BIR Form 2307 for Parking Lot and Valet Services.

Worked example 1: a corporate client books a gaming lounge for a team-building event #

BrightPath Insurance Brokers Inc. books GameZone Hub, a sole-proprietor-owned gaming lounge, for a half-day team-building event for 60 employees. GameZone Hub charges a flat package fee covering exclusive use of its console stations, VR rigs, and staff for the afternoon.

BrightPath, the company paying for the event, is the withholding agent. It withholds ₱600, remits it through BIR Form 0619-E and the applicable quarterly return, and issues GameZone Hub a BIR Form 2307 under ATC WI120. Because the fee covers a one-time bundled use of the venue’s space, equipment, and staff — not an ongoing lease of a defined area to BrightPath — it is a service payment, not rent.

Worked example 2: a snack-bar concessionaire pays percentage-of-sales rent to a billiard hall #

Cue & Byte Entertainment Center, a billiard hall and internet cafe operator, allows QuickSnack Corner, an independent food-and-beverage concessionaire, to run a snack counter inside a defined corner of its floor space. Their agreement sets concession rent at 10% of QuickSnack’s monthly gross sales; this month’s sales produce a ₱15,000 concession fee.

Here the direction of withholding flips from the first example: QuickSnack Corner, the sub-operator paying the rent, is the withholding agent, not Cue & Byte, the venue operator receiving it. QuickSnack withholds ₱750, remits it, and issues Cue & Byte a BIR Form 2307 under ATC WC100 — even though the fee is computed as a percentage of sales rather than a fixed monthly figure, because what Cue & Byte is actually being paid for is continued, exclusive use of a specific, identified section of its floor.

Walk-in customers: no withholding at all #

The overwhelming majority of internet cafe, gaming lounge, and billiard hall transactions are retail sales to individual customers paying by the hour or by the game, and those are never withheld. An individual who walks in and pays out of pocket to play pool, use a gaming console, or browse the internet is not engaged in trade or business with respect to that payment, so no withholding-agent relationship exists under RR No. 2-98, Section 2.57.3(B). The venue simply issues an official receipt for the session; no BIR Form 2307 is generated. Withholding only enters the picture once the payor is itself a business paying under an event booking, a tournament contract, or a concession/sub-lease arrangement — the two scenarios covered above.

Frequently asked questions #

Does a company have to withhold tax when it books an internet cafe, gaming lounge, or billiard hall for a corporate event? #

Yes. A corporation or a business-registered individual that pays an internet cafe, gaming lounge, or billiard hall to host an event — a team-building outing, a product launch, a client appreciation night — is a withholding agent under RR No. 2-98, Section 2.57.3(A)-(B), because the payment is made in connection with its trade or business. It must withhold expanded withholding tax and issue BIR Form 2307 to the venue.

What withholding tax rate applies to a corporate event or team-building package paid to a gaming venue? #

A flat package fee paid to an internet cafe, gaming lounge, or billiard hall for use of the venue, consoles, tables, and staff during an event generally falls under the 2% general contractor/business-services bracket under RR No. 2-98, Section 2.57.2(E), as amended by RR No. 11-2018 — ATC WI120 for an individually owned venue or WC120 for one organized as a corporation.

Does a concessionaire pay withholding tax on a percentage-of-sales fee paid to a billiard hall or gaming lounge landlord? #

Yes. If a billiard hall, internet cafe, or gaming lounge operator leases out a defined corner of its floor space to a sub-operator or concessionaire — a snack bar, a repair kiosk, a separate games counter — and collects rent computed as a percentage of that sub-operator’s sales, the payment is still rent for a specific, identified space. The sub-operator, as the paying business, withholds 5% expanded withholding tax under RR No. 2-98, Section 2.57.2(B), as amended by RR No. 11-2018, and issues the venue operator a BIR Form 2307. The percentage-of-sales method only sets the peso amount; it doesn’t change the rental character of the payment.

Which ATC codes apply to payments to internet cafes, gaming lounges, and billiard halls? #

A corporate booking or event-package fee paid to the venue business uses ATC WI120 (individual/sole proprietor payee) or WC120 (corporation payee) under the 2% services bracket. A percentage-of-sales or fixed concession rent paid for a defined section of floor space uses the rental codes WI100 (individual lessor) or WC100 (corporate lessor) under the 5% bracket.

Does an individual customer paying to play pool or use a gaming console trigger withholding tax? #

No. Under RR No. 2-98, Section 2.57.3(B), withholding applies only to a payment connected to the payor’s trade or business. An individual who pays by the hour to use a console, a VR rig, or a billiard table for personal recreation is not a withholding agent, so no BIR Form 2307 is issued for that walk-in transaction.

Summary #

A company that books an internet cafe, gaming lounge, or billiard hall business for an event, tournament, or demo withholds at the flat 2% general services rate (ATC WI120/WC120) under RR No. 2-98, Section 2.57.2(E). A sub-operator or concessionaire that leases a defined section of floor space from the venue — even when rent is computed as a percentage of its own sales — instead falls under the 5% rental bracket (ATC WI100/WC100) under Section 2.57.2(B), with the sub-operator as the withholding agent. Ordinary walk-in customers paying by the hour to play or browse are not withheld at all. See BIR Form 2307 for Barbershops, Salons, and Spas for the same corporate-service-vs-space-rental split applied to a chair-rental model, and BIR Form 2307 for Parking Lot and Valet Services for the beneficial-use-and-control test behind the rental treatment.