written and last updated by
Sam Smith at
29 Jan 2024
Journalist, Editorial Department
The Philippine Charity Sweepstakes Office (PCSO) and the Philippine Amusement and Gaming Corporation (PAGCOR) are working to reduce taxes on casino and lottery winnings. Under the proposed Passive Income and Financial Intermediaries Taxation Act (PIFITA), which is currently under government review, the tax rate on passive income is set to be lowered to 15 percent. This change is expected to enhance compliance with tax regulations.
During the second public hearing on tax measures, PCSO Chairman Junie Cua announced plans to halve the lottery winnings tax to 10 percent, benefiting low-income players. He stated, "We believe that the winners are primarily those in need, and therefore, hypothetically, we could reduce the tax on winnings."
Kat Contacto from PCSO emphasized that the charity fund reached $324 million last year, but 67 percent, or $216 million, went towards documentary stamp tax (DST). Consequently, PCSO is also lobbying to reduce its DST obligations from 20 percent to 10 percent.
Contacto recalled that in 2018, PCSO initially attempted to pass on costs to players, but this led to a decline in ticket sales in 2019. As DST continues to "eat away" at the charity fund, only 11 percent, or $35.4 million, was allocated in 2023 for the PCSO's Medical Access Program, which provides financial assistance for hospitalization and health-related issues. The agency estimates that in 2024, $248 million will be spent on DST, leaving only $29.7 million for beneficiaries of the Medical Access Program.
However, if the proposed tax reduction is approved, PCSO anticipates an additional $53.1 million for the program, bringing the total to $86.75 million.
Contacto added, "We are appealing to the Senate for assistance on this matter, as charity is the reason for PCSO's existence, and our revenues are practically the lifeblood for fulfilling our mission."
Meanwhile, Arnold Salvosa, an assistant to the Vice President of PAGCOR's Corporate Services Department, suggested exempting gambling winnings from taxes. He noted, "Our closest competitors in Asia—Singapore and Macau—do not tax casino winnings at all. They view them as windfalls rather than income."
Referring to the tax system in the United States, Salvosa pointed out that casino winnings are taxed as part of an individual's income tax based on whether they are treated as business income or a source of profit.
Earlier reports indicated that by 2028, gaming revenues in the Philippines could double due to an influx of tourists.
