Requested from BIR by G. Orlando at 08:04 PM on
Aug 18, 2021.
Purpose: Research Paper
Date of Coverage: 08/18/2021 - 08/18/2021
Tracking no: #BIR-072588744352
Orlando 08:04 PM, Aug 18, 2021
We are currently doing our research paper about taxation on lotto prizes in connection with TRAIN Law or RA 10963. Anent to this, may we ask some questions with the following.
1. Does the Lotto Jackpot prize of PCSO are subject to taxation? If yes, how many percent?
2. Is it right and just that Lotto winnings are subject for taxation despite of being a tax free before?
3. If a Filipino citizen won a lotto jackpot prize outside the Philippines (like US lottery) and then later on he decided to bring it in the Philippines, will the government will impose a tax on that? Yes or No, and why?
Du 04:55 PM, Aug 19, 2021
August 19, 2021
Dear Mr. Orlando,
Thank you for your request dated Aug 18, 2021 under Executive Order No. 2 (s. 2016) on Freedom of Information in the Executive Branch, for Taxation.
We received your request on Aug 18, 2021 and will respond on or before Sep 08, 2021 08:04:27 PM, in accordance with the Executive Order's implementing rules and regulations.
Should you have any questions regarding your request, kindly contact me using the reply function on the eFOI portal at https://efoi-ph.appspot.com/requests/aglzfmVmb2ktcGhyHQsSB0NvbnRlbnQiEEJJUi0wNzI1ODg3NDQzNTIM, for request with ticket number #BIR-072588744352.
Thank you.
Respectfully,
Ana Marie Du
FOI Officer
Decision Maker 02:01 PM, Aug 23, 2021
August 23, 2021
Dear Mr. Gapusan,
Anent your questions, to wit:
1. Does the Lotto Jackpot prize of PCSO are subject to taxation? If yes, how many percent?
2. Is it right and just that Lotto winnings are subject for taxation despite of being a tax free before?
3. If a Filipino citizen won a lotto jackpot prize outside the Philippines (like US lottery) and then later on he decided to bring it in the Philippines, will the government will impose a tax on that? Yes or No, and why?
Please be informed as follows:
1. Yes, lotto winnings of individuals are generally subject to a twenty percent (20%) final withholding tax, except winnings amounting to Ten thousand pesos (P10,000) or less which are tax exempt (Sections 24(B) and 25(A) and (B), 1997 Tax Code).
2. Taxation is a prerogative of Congress and the BIR only implements what is provided under the law. Questions on the wisdom of the law should be addressed to Congress.
3. Resident Filipino citizens are subject to tax on their income derived from within and outside the Philippines. Thus, lotto winnings derived from outside the Philippines are subject to income tax on the part of the resident Filipino citizen, regardless of whether or not he brings it to the Philippines. The winnings however are subject to the regular income tax rate which ranges from 0% to 35% depending on the amount of winnings (Section 24(A), 1997 Tax Code). If the recipient is a non-resident Filipino citizen, the winnings derived outside the Philippines is not taxable as he is only taxable on income derived from within the Philippines.
Please note that the above discussion is based only on my personal opinion. The Commissioner of Internal Revenue has the sole authority to issue legal opinion or ruling relative to the interpretation of the Tax Code. Thus, should you wish to secure the official legal opinion or ruling of the Bureau, please comply with the guidelines set forth in Revenue Memorandum Order No. 9-2014 which you can download from www.bir.gov.ph.
Sincerely,
Chief, Law and Legislative Division
Orlando 12:47 PM, Aug 24, 2021
In question No. 3 you answered that:
Resident Filipino citizens are subject to tax on their income derived from within and outside the Philippines. Thus, lotto winnings derived from outside the Philippines are subject to income tax on the part of the resident Filipino citizen, regardless of whether or not he brings it to the Philippines. The winnings however are subject to the regular income tax rate which ranges from 0% to 35% depending on the amount of winnings (Section 24(A), 1997 Tax Code). If the recipient is a non-resident Filipino citizen, the winnings derived outside the Philippines is not taxable as he is only taxable on income derived from within the Philippines.
Now, for a follow up question from this honorable office as question No. 4
Does a lotto winnings derived from outside the Philippines are also subject to the 20% tax under the TRAIN law aside from the income tax? Thank you!
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