There are taxes in E-Sabong
Income received by the Cockpit Owner/Operator for the use of the cockpit arenas/venues from the E-Sabong Operator shall be subject to regular income tax, VAT, or percentage tax, depending on the threshold, withholding tax, and other taxes, as may be deemed appropriate
Published in Daily Tribune on March 17, 2022
by: Juan Romulo R. Taleon
With the controversies brought about by E-Sabong and the massive income that comes with it, one must be wary of the fact that in every income there is a concomitant tax liability that every income-earner should be aware of. In this regard, the Bureau of Internal Revenue (BIR) recently issued Revenue Memorandum Circular 25-2022 Clarifying the taxability of Electronic Sabong (E-Sabong) Operations as regulated by the Philippine Amusement and Gaming Corporation (PAGCOR).
What’s important in this Circular is the fact that the BIR clarified the tax exemption of PAGCOR extends only to those individuals or entities that have contracted with PAGCOR, in this case, PAGCOR contractees and not licensees, in connection with PAGCOR’s gaming operations.
Furthermore, it summarizes the policies and guidelines for registration of E-Sabong entities, filing applicable tax returns, keeping books, withholding the required withholding taxes, and giving the BIR the authority to inspect betting devices used in its operation.
It also identifies and classifies the different types of income earned/generated into E-Sabong Operator’s Income, Agent’s Commission, Promoter/Coordinator’s Commission, Cockpit Owner/Operator’s Income, Game Cock Owner’s Income, and Duly Licensed Third-Party Betting Station Host Income from E-Sabong Operation.
The BIR also prescribes a different tax treatment for each of the different income types generated from its operations which are:
a. Gaming income for an E-Sabong Operation by an E-Sabong Operator shall be subject to five percent franchise tax, which shall be in lieu of all internal revenue taxes except VAT or percentage tax, depending on the threshold. There will be VAT at zero-rate ff the operator has contracted with PAGCOR for the provision of goods and services in connection with PAGCOR’s gaming operations. Such franchise tax shall be remitted by the E-Sabong Operator directly to the BIR. Note, however, that this five percent franchise tax shall be separate and distinct from the five percent franchise tax due from PAGCOR arising from the licensing and regulatory fees that PAGCOR receives from the E-Sabong Operator.
b. The Service Income from E-Sabong Operation by an E-Sabong Operator, shall be subject to regular income tax, value-added tax, or percentage tax depending on the threshold, withholding tax, and other taxes, as may be deemed appropriate.
c. Other Income from E-Sabong by an E-Sabong Operator or the income or earnings realized by the E-Sabong Operator from all other activities whose authorization does not derive from the E-Sabong license issued by PAGCOR shall be subject to regular income tax, VAT, or percentage tax depending on the threshold, withholding tax and other taxes, as may be deemed appropriate.
d. Commission Income derived by a Third Party E-Sabong Master Agent/Agent shall be subject to regular income tax, value-added tax or percentage tax depending on the threshold, withholding tax and other taxes, as may be deemed appropriate.
e. Commission Income received by a Third-Party E-Sabong Promoter/Coordinator shall be subject to regular income tax, VAT, or percentage tax depending on the threshold, withholding tax and other taxes, as may be deemed appropriate.
f. Income received by the Cockpit Owner/Operator for the use of the cockpit arenas/venues from the E-Sabong Operator shall be subject to regular income tax, VAT, or percentage tax, depending on the threshold, withholding tax, and other taxes, as may be deemed appropriate.
g. Income received by a Third Party Off Cockpit Betting Station Host from the OCBS shall be subject to appropriate taxes.
h. Income received by a Third-Party Game Cock Owner from the E-Sabong Operator in relation to the E-Sabong operation shall be subject to appropriate taxes.
i. Other income derived or received by any person/s or entity/ies in relation to the operation/s of E-inot included in the above-mentioned enumeration shall be subject to appropriate taxes.
By releasing this Circular, the BIR not only clarified misconceptions on the taxability of E-Sabong but also paved the way for a more serious and responsible tax collection system.
