How POGOs Were Taxed Under RA 11590: The BIR Gaming Tax Rules

Republic Act No. 11590 taxed Philippine Offshore Gaming Operators (POGOs) through three separate BIR rules: a 5% gaming tax on gross gaming revenue in lieu of most other national and local taxes, a 25% regular corporate income tax on non-gaming revenue, and a 25% final withholding tax (₱12,500 monthly minimum) on foreign employees’ pay. Signed September 22, 2021, RA 11590 was the framework that governed POGO taxation while licenses were active. That licensing regime has since ended: the Philippine government banned POGOs outright starting late 2024, and Congress made the ban permanent through Republic Act No. 12312 in October 2025 — so this guide explains a tax structure that is now mostly relevant to historical compliance and understanding how the BIR previously treated this industry.

What RA 11590 actually taxed #

RA 11590 amended the National Internal Revenue Code (NIRC) to add Section 125-A and revise Sections 22, 25, 27, and 28, creating a purpose-built tax regime for offshore gaming licensees (OGLs) instead of taxing them under ordinary corporate and franchise tax rules. It defined “offshore gaming licensee” to cover both Philippine-based and foreign-based operators licensed by the Philippine Amusement and Gaming Corporation (PAGCOR) or a special economic zone, tourism zone, or freeport authority, and it deemed all such licensees — even foreign-based ones — as doing business in the Philippines for tax purposes. The law separated a POGO’s income into two buckets taxed under entirely different rules: gaming revenue, and everything else.

The 5% gaming tax on gross gaming revenue #

The core of RA 11590 was a 5% gaming tax on an OGL’s gross gaming revenue or receipts, or on the agreed minimum monthly guaranteed fee, whichever was higher — charged instead of the income tax, VAT, and local taxes that would otherwise apply to that gaming income. “Gross gaming revenue or receipts” meant gross wagers less payouts to players. The statutory language, as published on LawPhil.net’s official compilation of the 2021 Republic Acts, reads:

“The entire gross gaming revenue or receipts or the agreed predetermined minimum monthly revenue or receipts from gaming, whichever is higher, shall be levied, assessed, and collected a gaming tax equivalent to five percent (5%), in lieu of all other direct and indirect internal revenue taxes and local taxes, with respect to gaming income.”

This structure — a single fixed percentage of turnover instead of net-income taxation — is common for gambling operations, where regulators want a predictable, hard-to-manipulate base rather than one that depends on a company’s reported expenses. The gaming tax applied whether the OGL was Philippine-based or foreign-based, and it was due for remittance to the BIR by the 20th day of the month following the taxable month.

RA 11590 was not the first attempt to tax POGOs this way. Congress had tried to impose a similar 5% franchise tax on POGO gross bets through Section 11(f) and (g) of the Bayanihan to Recover as One Act (Bayanihan 2) in 2020. The Supreme Court struck that provision down, ruling that inserting a new tax into a temporary COVID-19 relief law violated the one-subject-one-title rule of the Constitution, and voided the implementing revenue regulations issued under it. RA 11590 was enacted specifically to re-establish a valid statutory basis for taxing POGOs, and the Court later confirmed that POGOs could not be held liable for gaming taxes covering periods before RA 11590 took effect, since no valid law existed for that earlier stretch.

Worked example: computing the gaming tax #

A worked figure makes the “in lieu of” mechanic concrete: a Philippine-based offshore gaming licensee with ₱200,000,000 in gross gaming revenue for a given month owed a flat ₱10,000,000 gaming tax, and that single payment stood in for VAT, other national internal revenue taxes, and local taxes on that same gaming revenue. The computation:

If the licensee’s agreed predetermined minimum monthly guaranteed fee for that month had instead worked out to, say, ₱11,000,000, the 5% gaming tax would have been computed on that higher figure instead of the ₱200,000,000 actual GGR, because the law used whichever base was higher.

The 25% rate on non-gaming income #

Income a Philippine-based OGL earned outside its actual gaming operations — non-gaming revenue such as rental, service, or other business income — did not qualify for the 5% gaming tax and was instead subject to the regular 25% corporate income tax under Section 27 of the Tax Code, as amended by the CREATE Act. RA 11590 was explicit that this 25% applied to taxable income “derived during each taxable year from all sources within and without the Philippines” for Philippine-based licensees, while foreign-based licensees were taxed at 25% only on non-gaming revenue sourced within the Philippines. This is the same standard 25% regular corporate income tax rate that applies to most Philippine corporations — see our explainer on corporate income tax rates under the CREATE Act for how that rate and its 20% MSME variant generally work. Accredited service providers to OGLs were carved out of the gaming tax entirely and taxed at the regular corporate rate on all their income, plus all other applicable national and local taxes.

25% withholding tax on foreign POGO employees #

Every foreign national employed by an OGL or its accredited service provider — regardless of the nature of employment or residency status — was subject to a 25% final withholding tax on gross income, or a minimum final withholding tax of ₱12,500 per month, whichever was higher. That ₱12,500 floor meant an employer could not withhold less than that amount even if 25% of an employee’s actual monthly pay would have produced a smaller number. Employers also had to secure a Tax Identification Number (TIN) for every foreign employee; failing to do so exposed the OGL to a ₱20,000 penalty per undocumented worker, on top of exposing the foreign employee to possible deportation and blacklisting.

Worked example: a foreign staff member earning ₱80,000 in gross monthly compensation from a POGO service provider would generate a 25% withholding of ₱20,000 (₱80,000 × 25%) — above the ₱12,500 floor, so the employer withheld and remitted the full ₱20,000 rather than the minimum. A lower-paid foreign worker earning, say, ₱40,000 a month would compute to ₱10,000 at 25%, which is below the ₱12,500 floor — so the employer was required to withhold ₱12,500 regardless, because RA 11590 set the minimum as a hard floor rather than a cap.

Current status: POGOs are banned, not merely regulated #

As of 2026, RA 11590’s licensing framework no longer has active licensees to apply to — the Philippine government banned all POGO operations starting late 2024 and made that ban permanent in 2025. President Marcos announced the ban during his July 2024 State of the Nation Address, citing links to human trafficking, cybercrime, and other social costs. He formalized it through Executive Order No. 74, signed November 5, 2024, ordering an immediate halt to all offshore gaming operations. By December 31, 2024, PAGCOR had cancelled all 42 offshore gaming licenses and 18 accredited service-provider accreditations, and 304 physical POGO sites nationwide had been shut down.

Congress then locked that policy in through Republic Act No. 12312, the Anti-POGO Act of 2025, signed into law on October 23, 2025 and published October 29, 2025. RA 12312 cancels any remaining POGO licenses, work permits, and related visas outright and bars any future administration from issuing or renewing offshore gaming licenses without a new act of Congress. In practical terms, RA 11590’s gaming tax, non-gaming income tax, and foreign-employee withholding rules described above remain part of the Tax Code and would still govern any surviving pre-ban liabilities, audits, or wind-down obligations tied to the period POGOs were licensed — but they no longer apply prospectively to new offshore gaming activity, because there is no longer a legal channel to hold a POGO license in the Philippines. Compare this to how ordinary businesses are taxed on the same kinds of revenue streams — for example, how franchise tax and VAT interact under Section 119 — to see how unusual the RA 11590 in-lieu-of structure was relative to standard BIR rules.

Frequently asked questions #

How were POGOs taxed under RA 11590? #

Republic Act No. 11590 taxed Philippine Offshore Gaming Operators through three separate rules: a 5% gaming tax on gross gaming revenue or receipts (or the agreed minimum monthly guaranteed fee, whichever was higher), imposed in lieu of all other national and local taxes on gaming income; a 25% regular corporate income tax on any non-gaming revenue earned by Philippine-based licensees; and a 25% final withholding tax (subject to a ₱12,500 monthly minimum) on the compensation of foreign nationals employed by POGOs and their service providers.

Are POGOs still legal and operating in the Philippines in 2026? #

No. President Marcos ordered an immediate ban on all POGO operations through Executive Order No. 74, signed November 5, 2024, and by December 31, 2024 all 42 offshore gaming licenses and 18 accredited service-provider accreditations had been cancelled and physical POGO sites shut down. Congress made the ban permanent by enacting Republic Act No. 12312, the Anti-POGO Act of 2025, signed October 23, 2025, which bars any future issuance or renewal of offshore gaming licenses. RA 11590’s tax rules remain relevant mainly to closing out pre-ban liabilities and understanding the framework that applied while POGOs were licensed.

Why was the 5% gaming tax “in lieu of” other taxes? #

RA 11590 structured the gaming tax as a final tax on gross gaming revenue instead of the usual mix of income tax, VAT or percentage tax, and local business taxes that would otherwise apply to that revenue stream. This in-lieu-of design mirrors how franchise and amusement taxes are typically applied to gambling operations in the Philippines, and it replaced an earlier attempt to tax POGOs through the Bayanihan 2 law that the Supreme Court struck down.

What tax rate applied to a POGO’s non-gaming income? #

Non-gaming revenue of a Philippine-based offshore gaming licensee — income not derived directly from gaming operations, such as rental or service income — was subject to the regular 25% corporate income tax under Section 27 of the Tax Code, computed on taxable income from all sources within and outside the Philippines, separately from the 5% gaming tax on gaming revenue.

How much withholding tax applied to a foreign POGO employee’s salary? #

Foreign nationals employed by an offshore gaming licensee or its service provider, regardless of residency status, were subject to a 25% final withholding tax on their gross income, or a minimum final withholding tax of ₱12,500 per month, whichever amount was higher — meaning even a lower-paid foreign worker’s employer still had to withhold at least ₱12,500 for that month.

Summary #

RA 11590 built a self-contained tax regime for a narrow, high-risk industry: a flat 5% gaming tax on gross gaming revenue in place of ordinary income tax, VAT, and local taxes; the standard 25% corporate income tax on any non-gaming revenue; and a 25% (₱12,500 monthly minimum) final withholding tax on foreign staff. It replaced a franchise-tax approach the Supreme Court had invalidated, and it operated for roughly three years before the government banned POGOs outright through Executive Order No. 74 in November 2024 and Congress permanently closed the door with Republic Act No. 12312 in October 2025. Anyone researching this topic in 2026 should treat RA 11590 as the historical tax framework for a now-prohibited industry, not as a live licensing pathway.