Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Eighteenth Congress
First Regular Session

HOUSE BILL NO. pau

Introduced by Representative Jorge Antonio P. Bustos

EXPLANATORY NOTE

The Philippine Charity Sweepstakes Office (PCSO) was created to be the
principal government agency for raising and providing funds for health
programs, medical assistance and services, and charities of national character
through the conduct of charity sweepstakes races, lotteries, and other similar
activities. At present, PCSO remains as an indispensable arm of the government
that provides funding for essential health and welfare activities and programs
nationwide,

However, under Republic Act No. 10963, otherwise known as the “Zax
Reform for Acceleration and Inclusion (TRAIN),” amending the National
Internal Revenue Code of 1997, as amended, which was approved on December

27, 2018, additional taxes were imposed on PCSO. These new tax impositions |

include, among others: a) 20% final tax on winnings above P10,000 from
Philippine Charity Sweepstakes and lotto; b) 30% corporate income tax
Payment; and c) increase in the documentary stamp tax on tickets, lotto and
other authorized number games from 10% to 20%.

These changes in PCSO’s tax treatment are inconsistent with the nature of
PCSO as a charitable institution. In line with settled jurisprudence, PCSO is a
charitable institution because it provides services to the public which would
otherwise fall on the shoulders of government. Thus, as a matter of policy,
taxes are forgone in favor of charitable institutions because they assume part of
the burden to address public needs, and the loss of taxes by the government is

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compensated by its relief from doing public works which would have been
funded by appropriations from the National Treasury.

In view of the foregoing, the taxation of PCSO must be rationalized so that
it may fulfill its mandate, and ultimately, assist the National Government i in
raising and providing funds for charity.

Hence, approval of this bill is earnestly sought.

CONG JORG on


CaN THe WN

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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Eighteenth Congress
First Regular Session

HOUSE BILL No, 4424

Introduced by Representative Jorge Antonio P. Bustos

AN ACT
RATIONALIZING THE TAX TREATMENT FOR THE PHILIPPINE
CHARITY SWEEPTAKES OFFICE, AMENDING FOR THE PURPOSE
THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED

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

SECTION 1. Section 24 of the National Internal Revenue Code of 1997,
as amended, is hereby further amended to read as follows:

"SEC. 24. Income Tax Rates. — xxx

“(A) xxx

“(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


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similar arrangements: royalties, 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 winnings [amounting-to—Fen
thousand—pesos—{P10,000)-ortess] from Philippine
Charity Sweepstakes and Lotto which shall be exempt),
derived from sources within the Philippines: Provided,
however, That interest income received by an
individual taxpayer (except a nonresident individual)
from a depository bank under the expanded foreign
currency deposit system shall be subject to a final
income tax at the rate of fifteen percent (15%) of such
interest income: Provided, further, That interest
income from long-term deposit or investment in the
form of savings, common or individuals trust funds,
deposit substitutes, investment management accounts
and other investments evidenced by certificates in such

form prescribed by the Bangko Sentral ng Pilipinas


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(BSP) shall be exempt from the Tax imposed under
this Subsection: Provided, finally, That should the
holder of the certificate pre-terminate the deposit or
investment before the fifth (5") year, a final tax shall
be imposed on the entire income and shall be deducted
and withheld by the depository bank from the proceeds
of the long-term deposit or investment certificate based
on the remaining maturity thereof:
00" =
SEC. 2. Section 27 of the same Code is hereby further amended to read as
follows:
"SEC. 27. Rates of Income Tax on Domestic Cé ‘orporations. —
“(A) In General. — xxx
“Xxx,
“(C) — Government-owned or -Controlled Corporations,
Agencies or Instrumentalities. — The provisions of existing special
or general laws to the contrary notwithstanding, all corporations,
agencies, or instrumentalities owned or controlled by the
Government, except the Government Service Insurance System
(GSIS), the Social Security System (SSS), THE PHILIPPINE

CHARITY SWEEPSTAKES OFFICE (PCSO), the Philippine


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Health Insurance Corporation (PHIC), and the local water districts
shall pay such rate of tax upon their taxable income as are imposed
by this Section upon corporations or associations engaged in
similar business, industry, or activity.
SEC. 3. Section 190 of the same Code is hereby further amended to read
as follows:
“SEC. 190. Stamp Tax on Jai-alai, Horse Race, Tickets, Lotto
or Other Authorized Numbers Games. — On each jai-alai, horse
race ticket, lotto, or other authorized numbers games, there shall be
collected a documentary stamp tax of [Fwenty-eentaves-(P0.20)]

TEN CENTAVOS (P0.10): Provided, That if the cost of the ticket

“exceed One peso (P1.00), an additional tax of [Fwenty-centavos

€P0:20)] TEN CENTAVOS (P0.10) on every One peso (P1.00), or

fractional part thereof, shall be collected.”

SEC. 4. The Secretary of Finance shall, within thirty (30) days from the
effectivity of this Act, issue the rules and regulations necessary for the effective
implementation of this Act.

SEC. 5. All laws, rules and regulations, or parts thereof inconsistent with

the provisions of this Act, are hereby repealed or modified accordingly.


1 SEC. 6. This Act shall take effect fifteen (15) days after its publication in
2 the Official Gazette or in a newspaper of general circulation.

3 Approved,