Jackpot prizes from casinos and other gambling activities are subject to at least a 20-percent tax, the Bureau of Internal Revenue (BIR) said, clarifying the tax treatment of winnings amid the continued expansion of the Philippine gaming industry.

Internal Revenue Commissioner Charlito Martin R. Mendoza clarified through BIR Revenue Memorandum Circular (RMC) No. 57-2026, published last Tuesday, May 26, that winnings from casino and other gambling activities remain taxable.

According to the country’s main tax-collection agency, the clarification comes amid the industry’s rapid expansion under the regulatory framework of state-run Philippine Amusement and Gaming Corp. (Pagcor) and other authorized government bodies.

The BIR said the industry’s growth has led to more high-value jackpot prizes for players, prompting a surge in public queries.

As such, the taxman said there is a need to clarify the tax treatment of jackpot prizes to ensure the “consistent application of existing laws, promote equity and uniformity in taxation, and safeguard government revenue” without modifying the existing tax scope.

“Jackpot prizes derived from casino and other gambling activities, when falling within the scope of existing tax laws, are considered ‘winnings’, and are therefore subject to final withholding tax,” the RMC read.

The BIR said resident taxpayers are subject to a 20-percent final withholding tax on winnings.

“In the case of non-resident aliens not engaged in trade or business within the Philippines, jackpot prizes and winnings shall be subject to final withholding tax of 25 percent,” it added.

The tax base for these winnings will be the “gross amount of the jackpot prize or winnings, without any deduction for service charges, administrative fees, commissions, or other similar charges,” according to the BIR.

The circular covers winnings from both licensed gaming operators and, when applicable, unlicensed or unauthorized operators, following the principle that income from any source is subject to tax under existing laws.

A jackpot prize refers to the highest prize that may be won in a game of chance, whether paid in cash or in other forms.

This includes winnings from fixed prize pools, progressively increasing jackpots, and winning combinations in table games and electronic gaming machines (EGMs).

The BIR said gaming operators are designated as withholding agents responsible for remitting the required taxes to the government.

Any failure to withhold or remit the correct amount will render operators liable for “surcharge, interest, and compromise penalties, without prejudice to the filing of appropriate criminal actions,” the BIR warned.