The Philippines’ Bureau of Internal Revenue has moved to settle a long-running question in the country’s gaming sector, issuing formal guidance that casino jackpot prizes and other gambling winnings are subject to final withholding tax with a floor rate of 20 percent for residents and a higher rate for foreign winners.
The clarification came through Revenue Memorandum Circular No. 57-2026, signed by Internal Revenue Commissioner Charlito Martin Mendoza and published on May 26. The BIR said the growth of the industry had led to more high-value jackpot prizes for players, which in turn had generated more public questions about how such winnings should be taxed.
The circular was issued following inquiries regarding whether fixed and progressive jackpots should be covered by existing withholding tax rules. Under the circular, jackpot prizes received by individuals fall within the statutory definition of winnings under the National Internal Revenue Code, making them subject to final withholding tax.
Resident taxpayers will pay final withholding tax at the rate of 20 percent on their winnings. For nonresident aliens not involved in any trade or business in the Philippines, jackpots and winnings will be taxed at 25 percent. The distinction matters in a market like the Philippines, where casino properties in Entertainment City and Clark regularly attract high-net-worth visitors from across Asia who travel specifically to chase large jackpot events.
One of the most consequential aspects of the circular is how it defines the tax base. The tax base covers the gross winnings or jackpot without any deductions for service charges, fees for administration and commission, or any other charges meaning the full prize amount is used in computing the tax liability. That approach removes any ambiguity about whether operators could structure payouts to reduce a winner’s taxable exposure through fee arrangements, closing a potential loophole before it could take root.
A progressive jackpot prize is defined under the circular as a type of jackpot prize that increases incrementally as more bets are placed, whether across linked tables, electronic gaming machines or bingo games, until such prize is won. The inclusion of progressive jackpots alongside fixed jackpots is significant it means the BIR’s guidance covers the full spectrum of high-value prize structures found across the Philippine gaming floor, from land-based slot machines to linked table game networks.
The rules cover casinos, bingo games, electronic gaming machines, slot machines, table games and similar gaming platforms operated by licensed gaming operators. Notably, the BIR said the circular applied not only to winnings from licensed operators but also, where applicable, to unlicensed or unauthorized gaming operators, consistent with the principle that income from any source may be taxable under existing laws. That last point sends a clear signal the tax obligation follows the winner, not the legal status of the operator from whom the prize was received.
Commissioner Mendoza warned that gaming operators and withholding agents must strictly comply with withholding tax rules or face immediate penalties. Operators were reminded of their obligation to properly withhold and remit taxes on jackpot prizes. The warning reflects an enforcement posture that goes beyond simply publishing guidance the BIR is putting the compliance burden squarely on operators and making clear that non-compliance will carry consequences.
For the broader Philippines gaming market, the circular arrives at a moment of considerable regulatory activity. PAGCOR’s ongoing restructuring of its licensing framework, the post-POGO cleanup and the wave of new integrated resort developments all point to an industry that is growing in commercial scale while simultaneously being held to a higher standard of regulatory compliance. The BIR’s jackpot tax clarification is one more piece of that puzzle ensuring that as prize pools grow larger and player wins become more visible, the tax framework keeping pace with that growth is unambiguous and enforceable from day one.
