The Philippine Bureau of Internal Revenue (BIR) has clarified that jackpot prizes from casinos and other gambling activities are considered winnings and are subject to final withholding tax under existing tax laws, the Philippine News Agency reported.
The clarification was issued under Memorandum Circular No. 57-2026 on Tuesday, after the BIR received numerous inquiries on whether jackpot prizes, including fixed and progressive jackpots, fall within the definition of “winnings” under the Tax Code.
The circular appears to clarify an existing tax treatment rather than introduce a new levy, as Philippine tax rules have long subjected prizes and other winnings to final withholding tax. The uncertainty mainly centered on whether casino jackpot prizes, including fixed and progressive jackpots, should be treated as winnings and withheld by gaming operators.
The BIR said the circular applies to jackpot prizes or similar winnings derived by individuals, whether citizens or aliens, from participation in casino gaming and other gambling activities.
For resident individuals and other covered taxpayers, the tax base for computing the final withholding tax of 20 percent will be the gross amount of the jackpot prize or winnings. The BIR said no deduction should be made for service charges, administrative fees, commissions, or other similar charges.
For non-residents not engaged in trade or business in the Philippines, jackpot prizes and winnings are subject to a final withholding tax of 25 percent.
The circular also defined a progressive jackpot prize as a jackpot that increases incrementally as more bets are placed, whether across linked tables, electronic gaming machines, or bingo games, until the prize is won.
The BIR said the Philippine gaming and gambling industry has recorded significant growth under the regulatory framework of the Philippine Amusement and Gaming Corporation (PAGCOR) and other authorized government instrumentalities, including the Cagayan Economic Zone Authority and the Aurora Pacific Economic Zone and Freeport Authority.
“This expansion has led to more high-value jackpot prizes for players,” the BIR said.
“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 added.
BIR Commissioner Charlito Mendoza said in a text message that “the circular addresses possible confusion in coverage and strengthens compliance moving forward.”
“Gaming operators are considered withholding agents of such winnings and are reminded that failure to withhold and remit the correct tax will make them liable for the tax due, as well as the applicable penalties under the Tax Code,” he said.
