The Philippines’ Bureau of Internal Revenue (BIR) said in a Tuesday circular that “jackpot prizes or winnings” from casino games, as well as a defined list of other gaming activities, are subject to final withholding tax.
A 20 percent tax applies for Philippine nationals and resident aliens, and for “non-resident aliens not engaged in trade or business within the Philippines,” a 25 percent tax is applicable, said the tax bureau, adding the provision had immediate effect.
The tax base for computing the final withholding tax would be “the gross amount of the jackpot prize or winnings, without any deduction for service charges, administrative fees, commissions, or other similar charges”.
The defined activities cover jackpot prizes – including progressive jackpots – or winnings from a physical or electronic casino, “whether licensed, regulated, or authorised by law or by Pagcor, and by other duly authorised government agencies such as, but not limited to, CEZA and APECO”.
Those were references respectively to the national regulator, the Philippine Amusement and Gaming Corp (Pagcor); and two bodies that have had rights for online licensing: the Cagayan Economic Zone Authority (CEZA); and the Aurora Pacific Economic Zone and Freeport (APECO). Bingo is also covered by the memo.
The tax bureau stated it had “received numerous inquiries” regarding the scope of the term ‘winnings’ under the tax code, “particularly on whether jackpot prizes, including fixed and progressive jackpots, fall within such definition and are consequently subject to the final withholding tax”.
The bureau added that “in recent years, the Philippines gaming and gambling industry has experienced significant growth” under the regulatory framework of relevant agencies.
“This expansion has led to more high-value jackpot prizes for players,” the bureau noted.
It stated: “In view of these developments, there is a compelling need to clarify the tax treatment of jackpot prizes to ensure consistent application of existing laws, promote equity and uniformity in taxation, and safeguard government revenue – without expanding or modifying the scope of the law.”
It said any failure of a withholding agent or gaming operator to withhold and remit the correct amount of final tax on jackpot prizes or winnings “shall render such party liable for the corresponding surcharge, interest, and compromise penalties, without prejudice to the filing of appropriate criminal actions,” in accordance with the relevant portion of the tax code.
