Philippine’s BIR clarifies tax rules on casino jackpot prizes
Jackpot prizes from casinos and other gambling activities are taxable winnings, according to a Revenue Memorandum sent out by the Philippine Bureau of Internal Revenue (BIR). Based on existing laws, they are subject to final withholding tax.
Revenue Memorandum Circular No. 57-2026 was recently published in response to queries on whether fixed and progressive jackpots are categorised under the definition of “winnings” in the Tax Code. This clarification also highlighted that this is not a new levy but rather a reiteration of the long-standing rules.
Additionally, the memorandum pertains to jackpot prizes or similar winnings earned by individuals, whether citizens or foreign nationals, through casino gaming and other forms of gambling.
Tax rates
Jackpot taxation is deeply ingrained in the country. For one, the 1997 National Internal Revenue Code puts “prizes and other winnings” under taxable income. Moreover, the TRAIN Law also echoes this rule. This removes exemptions for small lottery prizes.
The BIR’s latest circular reiterates that casino jackpots, fixed or progressive, fall under this guideline. Residents and covered taxpayers are subject to 20 per cent final withholding tax on the gross prize, with no deductions for service charges, administrative fees, or commissions. Meanwhile, non-residents not engaged in trade or business are subject to 25 per cent final withholding tax.
Failure to comply exposes operators to surcharges, interest, compromise penalties, and even criminal liability under the Tax Code, as reported by several media outlets. A progressive jackpot is a prize pool that grows incrementally as more bets are placed, linked to tables, electronic gaming machines, or bingo games, until eventually won.
Industry context
The gaming sector in the Philippines has expanded significantly under the regulatory framework of PAGCOR (Philippine Amusement and Gaming Corporation), the Cagayan Economic Zone Authority, and the Aurora Pacific Economic Zone and Freeport Authority, according to the BIR.
Larger jackpots have made consistent tax treatment essential. Doing so helps clarify taxation, enabling the BIR to strengthen PAGCOR’s regulatory credibility. This also makes the country more attractive to investors seeking predictable rules.
The established transparent tax system has reassured international visitors, as it aligns with similar practices in regulated markets like the US. Additionally, these withholding taxes have been shown to support education, healthcare, and responsible gaming campaigns, as well as funding for gambling-related social costs, according to media reports.
But casino jackpot taxation varies around the world. The United States, for instance, imposes heavy taxation with a 24-30 per cent withholding rate, while regions like Singapore, the UK, and Macau offer tax-free winnings for individuals. Macau instead taxes operators.
The Philippines’ 20-25 per cent withholding rate mirrors U.S. practice more than that of its Asian neighbours. Doing so enables steady inflows to the treasury and strengthens fiscal stability. In 2025, the gaming sector generated PHP201 billion ($3.2 billion) in online revenue, with jackpot taxation securing a cut of this expanding market, according to reports.
Investment climate
The casino investment in the Philippines remains mixed to date. While online gaming remains the growth driver, land-based casinos are struggling with plateauing revenues, regulatory tightening, and weaker tourist arrivals, with analysts’ investor sentiment being cautious, according to several media outlets.
The memorandum underscores the government’s aim to ensure equity, uniformity, and revenue protection in taxation, while avoiding any expansion of the law’s scope.
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