20% Final Withholding Tax on Winnings on Progressive Link slot Machine Jackpots

May 30, 1988 BIR RULING NO. 221-88 21-c 000-00 221-88 Gentlemen : This refers to you letter dated March 9, 1988 stating that our Manila Regional Director is requiring you to impose a 20% final withholding tax on winnings on your progressive link slot machine jackpots; that you are requesting the reduction of the applicable tax rate to 10%. You contended that considerable time and money is being spent by customers playing in those slot machines in anticipation of the jackpot, hence an allowance for losses incurred should be taken into account; and that, you have acquired a Super Link slot machine system to be installed in your Luzon branches with an initial jackpot of P500,000.00 and the imposition of taxes on winnings will affect the customer acceptance. In reply, I regret to inform you that your request cannot be granted by this Office for lack of legal basis. Pursuant to Section 21(c)(1) of the Tax Code, as amended, "royalties, prizes (except prizes, amounting to P3,000 or less which shall be subject to tax under paragraph (a) and other winnings (except Philippine Charity Sweepstakes winnings)" are subject to 20% final tax. Accordingly, the above winnings regardless of the amount are subject to the 20% final tax. cdtech Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner