PCSO charter needs amendments to remove 20% tax on lottery winnings: BIR expert

March 12, 2018 - 6:40 PM
Bureau of Internal Revenue expert Marivic Gaban explains to PCSO officials the pros and cons of the 20% tax on lottery winnings. HANDOUT PHOTO, PCSO

MANILA – With the Tax Reform for Acceleration and Inclusion (TRAIN) law now implemented, there is no recourse but to request Congress to file amendments to Republic Act 1169, the Charter of the Philippine Charity Sweepstakes Office (PCSO), if the agency wants its lottery winning prizes to be exempted from the 20 percent tax, according to tax experts.

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

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

On the invitation of PCSO General Manager Alexander Balutan, the Bureau of Internal Revenue sent Marivic Gaban to meet with officials of the charity agency last Friday to enlighten them on the effect if 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 PCO such as Lotto, Keno (Lotto Express), Small Town Lottery (STL), 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 revenues for the same period in 2017.

“Of all number games, Ultra Lotto 6/58 had the highest reported sales at P861,377,840 with a 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.

“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 need medical services,” Balutan said.

He assured the public that the agency will continue its efforts to increase the revenues.

He predicted that the government is set to earn up to P1-billion monthly tax from the various lottery games of PCSO.

“Sa buwan-buwan na ipinapatong sa [PCSO] na tax, nang kinumpyot namin dati-rati ang ibinibigay namin na tax mula sa lahat ng ating lottery games ay P500 million. Ngayon, aabot na ng P1 billion, (When we computed the monthly taxes for PCSO from lottery, it was at P500 million. Now, it will reach P1 billion)” Balutan said.

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