Progressive and fixed jackpots are subject to final withholding tax under existing law.
 

Key Points

Jackpot prizes classified as “winnings” under the Tax Code

20% final withholding tax applies to residents on gross prize amount

Non-residents face 25% final withholding tax
 

The Bureau of Internal Revenue (BIR) has clarified that jackpot prizes derived from casino and other gambling activities are subject to final withholding tax when covered by existing tax laws.

In Memorandum Circular No. 57-2026 issued Tuesday, the BIR addressed inquiries about whether jackpot prizes, including both fixed and progressive jackpots, fall within the definition of “winnings” under the National Internal Revenue Code. The agency confirmed that such prizes are considered taxable winnings.

The circular defines a progressive jackpot as a prize that increases incrementally as more bets are placed, whether across linked gaming tables, electronic gaming machines, or bingo games, until it is won. The clarification applies to jackpot prizes and similar winnings received by individuals, whether Filipino citizens or foreign nationals, from casino gaming and other gambling activities.

Under the circular, the tax base for computing the final withholding tax is the gross amount of the jackpot prize, without any deduction for service charges, administrative fees, commissions, or similar costs. Resident individuals are subject to a 20% final withholding tax. For non-resident individuals not engaged in trade or business in the Philippines, jackpot winnings are subject to a 25% final withholding tax.

The BIR noted that the Philippine gaming industry has experienced significant growth under the regulatory oversight of PAGCOR and other government authorities, leading to more high-value jackpot prizes.

BIR Commissioner Charlito Mendoza said the circular aims to remove confusion and strengthen compliance. He reminded gaming operators that they are considered withholding agents and may be held liable for unpaid taxes and penalties if they fail to properly withhold and remit the required amounts.

 

 

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