THE BUREAU of Internal Revenue (BIR) has issued new revenue memorandum circulars targeting unpaid taxes in digital marketplaces and clarifying the taxation of large casino jackpots.
BIR Commissioner Charlito Martin R. Mendoza warned that electronic marketplace (e-marketplace) and gambling operators must strictly comply with withholding tax rules or face immediate penalties.
Under Revenue Memorandum Circular (RMC) No. 57-2026, the agency said jackpot prizes from casinos and other gambling activities are considered “winnings” and therefore subject to final withholding tax.
The circular was issued to address queries on the scope of “winnings” under the Tax Code.
“There is a 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,” it said.
The circular covers jackpot prizes, or the highest prize, derived by individuals from participation in casino gaming and other gambling activities.
“The tax base for computing the final withholding tax shall be the gross amount of the jackpot prize or winnings, without any deduction for service charges, administrative fees, commissions, or other similar charges,” the BIR said.
Winnings will be subject to a 20% final withholding tax or 25% if derived by nonresident aliens not engaged in trade or business in the Philippines.
“Failure of the withholding agent or gaming operator to withhold and remit the correct amount of final tax on jackpot prizes or winnings shall render such party liable for the corresponding surcharge, interest, and compromise penalties without prejudice to the filing of appropriate criminal actions,” the circular read.
Meanwhile, RMC No. 55-2026 requires operators and digital financial services providers (DFSP) to submit alphabetical lists of employees or payees from whom taxes were withheld (alphalists) as attachments to tax returns.
Monthly withholding tax returns for value-added tax and percentage tax are due on the 10th day of the following month, while quarterly alphalists for creditable and final withholding tax returns are due on the last day of the month following the quarter.
Annual alphalists for compensation and final withholding tax are due on Jan. 31, and those for creditable withholding tax on March 1 of the succeeding year.
“Since the alphalist is an attachment and therefore a part of the withholding tax return, the submission of the alphalist is likewise an obligation of the withholding agent,” it said.
“Failure to submit the alphalist constitutes a violation of BIR regulations and is subject to the corresponding penalty,” it added.
According to the BIR, e-marketplace operators and DFSPs are identified as withholding agents which require them to remit 0.5% of their gross remittances to sellers of goods and services.
“However, BIR records show that many of these entities have not complied with this requirement,” it said.
“This circular is hereby issued as a reminder to all withholding agents particularly e-marketplace operators and DFSPs, to strictly comply with the submission of the alphalist through the BIR eSubmission facility… to avoid unnecessary penalties,” it added.
MANDATORY ACCREDITATION
Meanwhile, business-to-business (B2B) gaming providers have until May 31 to secure mandatory accreditation or face an immediate ban, the Philippine Amusement and Gaming Corp. (PAGCOR) said.
In a May 21 memorandum, PAGCOR warned that companies failing to file applications will be barred from servicing gaming system administrators (GSA).
“Any request for evaluation of gaming systems, platforms, games, and equipment shall be returned,” it said, adding that services may only resume once accreditation is secured.
GSAs found themselves availing of services from noncompliant providers will also face sanctions.
Contracted B2B providers that submit applications by May 31 may continue operating until July 31, pending approval. However, they must complete payment of fees, documentary requirements, ocular inspection, and posting of a performance cash deposit.
“Failure to comply… shall result in the decommissioning of the concerned companies’ electronic gaming systems, online platforms, games, and equipment effective Aug. 1,” PAGCOR said.
HOTLINE FOR GAMBLING ADDICTION
In a separate release, PAGCOR launched a 24/7 hotline to address gambling problems and promote responsible gaming.
The agency announced that the National Problem Gambling Helpline is now ready to connect trained counselors for confidential support and counseling for those experiencing gaming-related issues, including family members of those affected.
“PAGCOR is aware that for many, gaming is just a form of leisure and recreation,” said PAGCOR Chairman and Chief Executive Officer Alejandro H. Tengco. “But for some, what may start as entertainment can gradually lead to financial strain and ruin, emotional distress, damaged relationships, and isolation.”
The program will be implemented in partnership with the Seagulls Flock Organization, Inc. — Justine Irish D. Tabile
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