Philippine Government Eyes Sharp Tax Hike for Online Gambling Operators

The Philippine government is actively weighing a substantial increase in taxes for online gambling operators, with Finance Secretary Ralph Recto revealing that rates could potentially climb from the current 25 percent up to 40 percent of gross gaming revenue (GGR), according to reports from GMA News. Speaking during the Post-State of the Nation Address (SONA) Discussions held in San Juan City, Recto laid out a series of proposed structures that could see operators taxed at 30, 35, or even 40 percent, as authorities push for tighter control of the online gambling sector.

This push for increased taxation comes amid heightened concern following the Department of Health’s declaration of online gambling as a “public health concern.” The proposed measures are part of a broader fiscal strategy aiming to collect PHP200 billion—or roughly $3.42 billion—in gambling-derived revenues this year, with an even split projected between land-based and digital operations.

Currently, integrated resorts offering online gaming services are subject to a 25 percent license fee on their GGR. The idea of boosting this rate isn’t new; Recto had earlier this month floated the concept of raising taxes in the sector, despite it already being regarded as one of the most heavily taxed globally.

The issue is complicated by recent regulatory adjustments. Beginning January 1, 2025, the Philippine Amusement and Gaming Corporation (PAGCOR) implemented a license fee reduction for online operations tied to integrated resorts, cutting the rate to 25 percent. This figure is notably down from the previous 35 percent, which itself had been lowered from a peak of 55 percent prior to PAGCOR Chairman Alejandro H. Tengco’s appointment.

Recto acknowledged that any shift in tax policy would be executed in coordination with PAGCOR, which maintains oversight over licensing and compliance for gambling operations across the country. “Everything is on the table,” Recto stated, referring to broader regulatory options that could include restricting hours for user cash-ins and limiting online gambling platforms’ access to digital wallets. However, he was careful to stress that “any changes should be coordinated with PAGCOR in advance.”

The discussion has sparked backlash from legal and industry observers. On July 13th, gaming law expert and Arden Consult CEO Tonet Quiogue issued a policy brief warning against the proposed tax increases. She cautioned that additional financial pressure could backfire, potentially pushing operators out of the legal market and into unregulated or grey areas. Quiogue emphasized that many licensed firms are already grappling with substantial tax burdens.

Her analysis revealed that by 2025, the average effective license fee imposed by PAGCOR will amount to approximately 30 percent of GGR—down from historical highs of 47.5 percent. On top of that, there’s a 10 percent audit fee applied to PAGCOR’s share, translating to an effective 3 percent of GGR, along with a national 5 percent franchise tax. In total, Quiogue estimates that the government captures between 35 and 38 percent of each operator’s gross revenue before even factoring in operational costs or profit margins. “These taxes are based on gross revenue rather than net income,” she wrote, noting that this places online gambling operators at a relative disadvantage compared to businesses in other sectors.

Addressing public concerns over the spread of unregulated gaming activity, Recto admitted that enforcement remains a challenge. “An estimated 60 percent of current online gambling activity in the country is illegal,” he said. While he expressed personal disapproval of gambling—“I am not in favor of gambling. My advice: do not gamble,”—he added, “But if people do, we’d rather regulate it than have them resort to illegal operations.”

As the government explores its next moves, the future of online gambling regulation in the Philippines remains fluid. With the Finance Department and PAGCOR set to continue their collaboration, stakeholders across the industry are watching closely for signs of how the country plans to balance fiscal goals, regulatory enforcement, and public health concerns.

By fLEXI tEAM