The Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 57-2026 to clarify that jackpot prizes from casino and other gambling activities are considered “winnings” under the National Internal Revenue Code (NIRC) of 1997, as amended. These winnings are subject to final withholding tax:
- 20% for citizens and resident aliens under Section 24(B)(1).
- 25% for non-resident aliens not engaged in trade or business under Section 25(B).
The tax base is the gross amount of the prize, with no deductions for service charges, administrative fees, or commissions.
Failure of gaming operators or withholding agents to properly withhold and remit taxes will result in surcharges, interest, compromise penalties, and possible criminal liability.
Key Insights
- Clarification, not expansion: The Circular does not impose new taxes but ensures uniform application of existing rules on gambling winnings.
- Coverage includes licensed and unlicensed operators: Reinforces the principle that income from any source is taxable.
- Progressive jackpots included: Both fixed and progressive jackpot prizes fall within the definition of taxable winnings.
- Compliance risk for operators: Gaming operators must strengthen withholding systems to avoid penalties and reputational damage.
- Revenue protection: This measure safeguards government collections amid the rapid growth of the Philippine gaming industry under Philippine Amusement and Gaming Corporation (PAGCOR), Cagayan Economic Zone Authority (CEZA), and Aurora Pacific Economic Zone and Freeport Authority (APECO).
Advisory for Clients
- For Individuals: Expect automatic withholding of 20% (or 25% if non-resident alien) on jackpot prizes. Net winnings will already reflect the tax.
- For Gaming Operators: Ensure strict compliance with withholding and remittance obligations. Review internal controls to avoid exposure to penalties.
- For Tax Practitioners: Advise clients that gambling winnings are taxable regardless of source, reinforcing the “income from any source” principle.
Conclusion
RMC No. 57-2026 provides clarity on the taxation of casino and gambling jackpot prizes. By explicitly defining these as taxable “winnings,” the BIR ensures consistency, equity, and protection of government revenues. Stakeholders—players, operators, and tax advisors—must align with this guidance to avoid compliance risks.
Reference:
Revenue Memorandum Circular No. 57-2026, “Clarification on the Inclusion of Jackpot Prizes from Casino and Other Gambling Activities Within the Statutory Definition of ‘Winnings’ Subject to Final Tax Pursuant to Sections 24(B)(1), 25(A)(1) and 25(B) of the National Internal Revenue Code of 1997, as Amended”, Bureau of Internal Revenue, May 26, 2026.
Article written by: Laurence Philip Manlapaz
