Casino jackpots taxable as ‘winnings,’ BIR says

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has moved to end confusion over the tax treatment of gambling prizes, saying casino jackpots and similar winnings are subject to a final withholding tax.

In Revenue Memorandum Circular (RMC) 57-2026, the agency clarified that the inclusion of jackpot prizes – the highest payout in any game of chance, whether in cash or kind – falls under the statutory definition of “winnings” under the National Internal Revenue Code of 1997.

Under the circular, Filipino citizens and resident aliens who win jackpot prizes will be subject to a 20-percent final withholding tax, while non-resident aliens not engaged in trade or business within the Philippines will face a 25-percent final withholding tax.

The tax base is the gross amount of the prize, with no deductions allowed for service charges, administrative fees, commissions or other similar charges.

The agency said this applies to jackpot winnings of citizens or aliens from licensed operators and, “where applicable, unlicensed or unauthorized  operators.”

The BIR said this clarification comes amid “numerous inquiries” about whether jackpots qualify as taxable winnings, as the gaming industry continues to expand.

The expansion of the industry under the regulatory framework of the Philippine Amusement and Gaming Corp. (PAGCOR) and other authorized government instrumentalities, including the Cagayan Economic Zone Authority and the Aurora Pacific Economic Zone and Freeport Authority, has led to more high-value jackpot prizes for players.

The clarification seeks 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,” the BIR said.

In the first quarter alone, PAGCOR’s gross gaming revenue amounted to P87.6 billion. The figure, however, was 15.9 percent lower than the previous year.

PAGCOR attributed the decline to softer electronic gaming sector turnout, tied to weaker household spending  due to rising consumer prices and the Middle East conflict.

The BIR strongly warned that gaming operators who fail to withhold and remit the correct tax may face surcharges, interest, compromise penalties and possible criminal charges, underscoring the serious consequences of noncompliance.

In a separate RMC 55-2026, the BIR said e-marketplace operators and digital financial services providers (DFSPs) are required to submit a list of employees and payees alongside their withholding tax returns.

It added that identified e-marketplace operators and DFSPs are required to remit one-half percent of their gross remittances to sellers of goods and services.

“However, the BIR records show that many of these entities have not complied with this requirement,” the agency said.