Cash Prizes Exceeding P3,000 Subject to Tax Rate of 20%

December 16, 1991 BIR RULING NO. 267-91 28 000-00 267-91 Gentlemen : This refers to your letter dated September 6, 1991 requesting for an exemption from taxes of the cash prizes to be given to the winners of the "Guro, Kasagip Ka" contest. cdtech It is represented that the "Guro, Kasagip Ka" contest was recently launched by the Department of Environment and Natural Resources (DENR) in connection with its Information and Education Campaign (IEC) for the year 1991; that such nationwide contest is aimed at mobilizing teachers as principal change agents in instilling to the public, especially to pupils and students, the importance of preserving a healthy environment; that the mechanics of the contest would involve the submission by participating teachers of a compilation of instructional materials to supplement the teaching of environment in selected subjects as the elementary level; and finally, that the following cash prizes shall be awarded to the first, second and third prize winners of each level, thus: A. Division Winners 3,000.00 1st Prize 2,000.00 2nd Prize 1,000.00 3rd Prize B. Regional Winners 10,000.00 1st Prize 7,000.00 2nd Prize 5,000.00 3rd Prize C. National Winners 100,000.00 1st Prize 60,000.00 2nd Prize 30,000.00 3rd Prize In reply, please be informed that Section 28 (a) (9) of the Tax Code, as amended, provides that prizes and winnings form part of gross income. Such being the case, the cash prizes for the winners of the "Guro, Kasagip Ka" contest are not exempt from income taxation. Accordingly, the tax rate of 20% shall be imposed upon the cash prizes exceeding P3,000.00 which tax shall be withheld at source pursuant to (Section 21 (c) (1) in relation to Section 50 (a) of the Tax Code, as amended. Taxes deducted and thus withheld by you shall be covered by a return and paid to the Revenue District Officer, Collection Agent, or duly authorized Treasurer of the City where your principal office is located. (Section 51, Tax Code, as amended). The prizes amounting to P3,000.00 or less, on the other hand shall nevertheless be reported as income by the respective recipients and subject to income tax at the rates prescribed under Section 21 (a) of the Tax Code, as amended. Very truly yours, (SGD.) JOSE U. ONG Commissioner