Cagayan Economic Zone also means the ability to file for the occasional tax holiday, which reduces income tax...
Online gambling has now reached the several trillion dollars a year mark. Which is why so many different companies want to enter this very lucrative market. The problem is that there are very few locations that are favorable to setting up and operating an online gambling company. And it's even illegal to operate in some countries or licensing requirements are quite strict.
Even so, everything from online slots to poker, casino gambling and sports betting continue to expand and are experiencing ever increasing demand. While certain Latin American and European countries do issue licenses to operate online gaming, there requirements are often quite strict and they normally demand at least five percent of the gross per year as an operating fee. So, it's not convenient or cheap to operate an online casino in most areas.
At the moment, the Philippines is the only Asia country to offer an online gaming license. In the Philippines, a public/private corporation called the Philippine Amusement and Gaming Corporation, also known as PAGCOR regulates online gaming. It alone licenses and regulates all gambling activities, online or off. In turn, PAGCOR has granted exclusive online gaming rights to a single company called Philweb until 2032.
This meant that, until 1995, if a company wanted to register in the Philippines, it would have to pay Philweb a large percentage and deal with an overwhelming bureaucracy.
Fortunately, the Philippines passed Republic act 7922 in 1995, which created the Cagayan Economic Zone Authority. This meant that a new gambling license was created that allowed companies to operate within the economic zone legally without the problem of Philweb.
The new economic zone license is quite a bit cheaper at only two percent of the gross. It's even cheaper for sports betting or those companies that only provide support services for gambling.
Operating from the Cagayan Economic Zone also means the ability to file for the occasional tax holiday, which reduces income tax to zero, and income is only taxed at five percent the rest of the time. Beyond this, there is a considerable bonus of being able to employ very competent English speaking professionals at very inexpensive wages.
At the moment, there are some forty companies, including several major online casinos, using the Cagayan Economic Zone license. This number will probably grow in the future, despite various companies trying to keep things close to the chest to avoid having their employees ripped off by competitors.