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SIXTEENTH CONGRESS ) fie ian ;
REPUBLIC OF THE PHILIPPINES ) | ON 12-MAR 2014.
First Regular Session ) l P}

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriguez and" *
Representative Maximo B. Rodriguez, Jr. oe

House Bill No. 4483

EXPLANATORY NOTE

Gross income is defined by Republic Act No. 8424, otherwise known as the Tax
Reform Act of 1997, as amended, as “Except when otherwise provided in this Title, gross
income means all income derived from whatever source, including (but not limited to) the
following items:

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(9) Prizes and winnings;
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As such, it would seem that there is no reason why Philippine Charity Sweepstakes
and Lotto winnings cannot be taxed

It cannot be denied that there are instances when the jackpot prizes for the numbers
game lotto reach hundreds of millions of pesos and it is not uncommon for jackpot prizes of
jotto to reach 100, 200, 300 million and higher. This could amount to much needed tax
revenues for the Philippine government.

In the most recent case of the balikbayan winner of the P741 millon jackpot, the US
government received over P200 million as tax revenues because the winner is a US citizen
That P200 million could have instead gone to the Philippine government if only lotto winnings
are taxed in the Philippines.

In view of the foregoing, immediate passage of this bill is earnestly requested.

RUF B. Rt IGUEZ

Dez.
Jie
MAXII B. RODRIGUEZ, JR.



SIXTEENTH CONGRESS >)
REPUBLIC OF THE PHILIPPINES )
First Regular Session )

HOUSE OF REPRESENTATIVES

Introduced by Representative Rufus B. Rodriquez and
“Representative Maximo B. Rodriguez, Jr.

House BillNo. _ 4183

AN ACT
FURTHER AMENDING REPUBLIC ACT 8424, OTHERWISE KNOWN AS “AN ACT
AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR
OTHER PURPOSES” BY REMOVING THE TAX EXEMPTION ON SWEEPSTAKES AND
LOTTO WINNINGS IN THE PHILIPPINES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Prizes from the Philippine Charity Sweepstakes and all forms of the numbers
game Lotto are hereby declared to be taxable.

SEC 2. Sec. 24 (B)(1) is hereby amended to read as follows:

SEC. 24, Income Tax Rates. -

(B) Rate of Tax on Certain Passive Income.

(1) Interests, Royalties, Prizes, and Other Winnings. - A final tax at the rate of twenty
percent (20%) is hereby imposed upon the amount of interest from any currency bank
deposit and yield or any other monetary benefit from deposit substitutes and from trust funds
and similar arrangements; royatties, except on books, as well as other literary works and
musical compositions, which shall be imposed a final tax of ten percent (10%); prizes
(except prizes amounting to Ten thousand pesos (P10,000) or less which shall be subject to
tax under Subsection (A) of Section 24; and other winnings [(except Philippine Charity
Sweepstakes and Lotto winnings)], derived from sources within the Philippines

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SEC. 3. Sec, 25 (A)(2) is hereby amended to read as follows:

‘SEC. 25. Tax on Nonresident Alien Individual, -

(A) Nonresident Alien Engaged in trade or Business Within the Philippines. -

(2) Cash and/or Property Dividends from a Domestic Corporation or Joint Stock
Company, or Insurance or Mutual Fund Company or Regional Operating Headquarters or
Multinational Company, or Share in the Distributable Net Income of a Partnership (Except a
General Professional Partnership), Joint Account, Joint Venture Taxable as a Corporation or
‘Association., Interests, Royalties, Prizes, and Other Winnings. - Cash and/or property
dividends from a domestic corporation, or from a joint stock company, or from an insurance
or mutual fund company or from a regional operating headquarters of multinational
company, or the share of a nonresident alien individual in the distributable net income after
tax of a partnership (except a general professional partnership) of which he is a partner, or
the share of a nonresident alien individual in the net income after tax of an association, a
joint account, or a joint venture taxable as a corporation of which he is a member or a co-
Venturer; interests: royalties (in any form), and prizes (except prizes amounting to Ten
thousand pesos (P10,000) or less which shall be subject to tax under Subsection (B)(1) of
Section 24) and other winnings [(except Philippine Charity Sweepstakes and Lotto


winnings)]; shall be subject to an income tax of twenty percent (20%) on the total amount
thereof,
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SEC. 5. Implementing Rules and Regulations — The Philippine Charity Sweepstakes Office
and the Bureau of Internal Revenue shall issue the rules and regulations necessary for the
{ull implementation of this Act.

SEC. 6. Separability Clause — If for any reason, any provision or section of this Act is
declared unconstitutional, such portions not affected thereby shall remain in full force and
effect.

SEC. 7. Repealing Clause - All laws, decrees, executive orders, department or
memorandum orders and other administrative issuances or parts thereof which are
inconsistent with the provisions of this Act are hereby modified, superseded or repealed
accordingly.

SEC. 8, Effectivity Clause — This Act shall take effect after fifteen (15) days following the
completion of its publication in the Official Gazette or in at least two (2) newspapers of
general circulation in the Philippines.

Approved,