The Bureau of Internal Revenue (BIR) has officially clarified that jackpot prizes derived from casino and other gambling activities are considered winnings under the Tax Code and are therefore subject to final withholding tax. This clarification was issued through Memorandum Circular No. 57-2026 on Tuesday, May 26, 2026, in response to numerous inquiries regarding the scope of the term “winnings.”
Definition of Jackpot Prizes
The circular defines a progressive jackpot prize as a type of jackpot that increases incrementally as more bets are placed, whether across linked tables, electronic gaming machines, or bingo games, until such a prize is won. Fixed jackpots are also covered under the definition.
Applicability and Tax Rates
The BIR stated that 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. The tax base for computing the final withholding tax of 20 percent shall be the gross amount of the jackpot prize or winnings, without any deduction for service charges, administrative fees, commissions, or other similar charges. For non-residents not engaged in trade or business within the Philippines, jackpot prizes and winnings shall be subject to a final withholding tax of 25 percent.
Background and Rationale
The BIR noted that the Philippine gaming and gambling industry has experienced significant growth under the regulatory framework of the Philippine Amusement and Gaming Corp. (PAGCOR) and other authorized government instrumentalities, including the Cagayan Economic Zone Authority (CEZA) and the Aurora Pacific Economic Zone and Freeport Authority (APECO). This expansion has led to more high-value jackpot prizes for players. In view of these developments, the BIR emphasized the 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.
