BIR official: Removal of 20% tax on lottery winning may require congressional approval

CITY OF SAN FERNANDO—Only an act of Congress can exempt Philippine Charity Sweepstakes Office (PCSO) winning lottery prizes to be exempted from the 20-percent tax.

This was the statement issued by Marivic Gaban of the Bureau of Internal Revenue (BIR) on Monday.

The implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) has slapped lottery prize winnings of the PCSO with a 20-percent tax.

With the TRAIN law’s implementation, there is no recourse but to request Congress to file amendments to Republic Act 1169, or the Charter of the PCSO, if it wants its lottery winning prizes to be exempted from the 20-percent tax, Gaban said.

The TRAIN law requires a 20-percent tax on all PCSO lottery games prizes if the amount of the winning is above the amount of P10,000.

Under the National Internal Revenue Code, lotto winnings and all PCSO prizes are tax-exempt.

Upon the invitation of PCSO General Manager Alexander F. Balutan, the BIR sent Gaban to meet with officials of the charity agency last Friday to brief them on the effect of the TRAIN law.

Earlier, Balutan expressed concern over the new tax obligation of winning bettors that might discourage the gaming public to patronize the various lottery games of PCSO, such as Lotto, Keno (Lotto Express), Small Town Lottery and Sweepstakes.

“We have to get the expert opinion of the BIR so we can explain this to the gaming public,” Balutan said.

“But according to our lawmakers, that’s still a windfall. If you win P100 million and have to give back P20 million to the government, you’d still be happy with it,” Balutan added.

He said he is optimistic that despite the new law, PCSO will continue to earn more revenues and efficiently deliver services to the public.

“The gaming public has renewed its trust and confidence in the PCSO despite some moves to destabilize and taint the agency with negative news,” he said.

From January to February of this year, the PCSO reported a slight increase in the sales of its various lottery products.

Balutan said the sales have increased by 2.81 percent, registering at P5.384 billion, from the P5.337 billion revenue for the same period in 2017.

“Of all number games, Ultra Lotto 6/58 had the highest reported sales at P861,377,840 with 83.91 percent increase, followed by Super Lotto at P454,712,080 sales with 25.78 percent increase,” he said.

Grand Lotto 6/55 similarly increased at 2.92 percent with P401,667,840 reported sales.

Lotto 6/42 and Mega Lotto had P388,657,760 and P428,712,080 reported sales, respectively, but they were down by 14 percent and 28 percent, respectively.

“This is the great thing happening now. The people are continuously patronizing PCSO’s gaming products. Of course, we are happy that the PCSO has increased earnings, which means we can help our people more, especially those that [are in dire] need [of] medical services,” Balutan said.

He assured the public that the agency will continue its efforts to increase the revenues, even as Balutan predicted that the government is set to earn up to P1 billion monthly tax from the various lottery games of PCSO.

He added the P1-billion tax could be higher based on revenue projections of PCSO this year that could reach up to P60 billion or more.




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Ashley Manabat is a correspondent of BusinessMirror. He is also the Vice Chair of Capampangan in Media Inc., Chair NUJP Pampanga chapter and the Treasurer Pampanga Press Club.