Publishing the Provisions of Executive Order No. 194 Dated June 16, 1987 Amending Section 203 and 229 of the National Internal Revenue Code as Amended, with Respect to the Documentary Stamp Tax and the Tax on Winnings on Horse Races

July 15, 1987 REVENUE MEMORANDUM CIRCULAR NO. 32-87 SUBJECT : Publishing the Provisions of Executive Order No. 194 Dated June 16, 1987 Amending Section 203 and 229 of the National Internal Revenue Code as Amended, with Respect to the Documentary Stamp Tax and the Tax on Winnings on Horse Races TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, the pertinent provisions of Executive Order No. 194 are hereunder quoted: Sec. 2. Stamp tax on horse race tickets . On each horse race ticket, there shall be collected a documentary stamp tax of ten (P0.10) centavos; Provided , That if the cost of the ticket exceeds one (P1.00) peso, an additional tax of ten (P0.10) centavos on every one (P1.00) peso or fractional part thereof shall be collected: Provided, further , That in the case of double, forecast/quinella and trifecta bets, the tax shall be five (P0.05) centavos on every one (P1.00) peso worth of ticket. Sec. 3. Tax on Winning . Every person who wins in horse races shall pay a tax equivalent to ten (10%) per cent of his winnings or "dividends", the tax to be based on the actual amount paid to him for every winning ticket after deducting the cost of the ticket: Provided , That in the case of winnings from double, forecast/quinella and trifecta bets, the tax shall be four (4%) per cent. In the case of owners of winning race horses, the tax shall be ten (10%) per cent of the prizes. casia The tax herein prescribed shall be deducted from the "dividends" corresponding to each winning ticket or the "prize" of each winning ticket or the "prize" of each winning race horse owner and withheld by the operator, manager, or person in-charge of the horse races before paying the dividends or prizes to the persons entitled thereto. The operator, manager, or person in-charge of horse races shall, within twenty (20) days from the date the tax was deducted and withheld in accordance with the second paragraph hereof, file a true and correct return with the Commissioner of the Bureau of Internal Revenue in the manner or form to be prescribed by the Secretary of Finance, and pay within the same period the total amount of tax so deducted and withheld. Sec. 4. The taxes herein prescribed shall be subject to review by the Secretary of Finance after eighteen (18) months from the date of effectivity and implementation of this Executive Order. If, after review, the level of government revenue from horse racing is equal to or higher than that corresponding to the eighteen (18) months immediately preceding the effectivity of this Executive Order, the tax structure for horse racing herein prescribed shall become permanent; otherwise, the taxes imposed under the National Internal Revenue Code, as amended, and the distribution of gross receipts from the sale of betting tickets in horse races under Republic Act Nos. 6631 and 6632 shall be automatically restored. Sec. 5. The Secretary of Finance shall promulgate the necessary rules and regulations to implement this Executive Order . Sec. 6. Subject to the provisions of Section 4 hereof, Sections 203 and 229 of the National Internal Revenue Code, as amended; and all laws, orders, issuances, and rules and regulations or parts thereof inconsistent with this Executive Order are hereby repealed or modified accordingly. Sec. 7. This Executive Order shall take effect immediately. Done in the City of Manila, this 16th day of June, in the year of Our Lord, nineteen hundred and eighty-seven. (Sgd.) CORAZON C. AQUINO President of the Philippines By the President: (Sgd.) JOKER P. ARROYO Executive Secretary SALIENT FEATURES : 1. In the imposition of the amount of documentary stamp tax on the horse race ticket, the Executive Order now classifies the class of the bets and prescribed two (2) rates. In the case of double, forecast/quinella and trifecta bets, the documentary stamp tax shall only be five (P0.05) centavos on every one (P1.00) peso worth of ticket. All other class of bets shall be subjected to ten (P0.10) centavos for each ticket and an additional (P0.10) centavos for every one (P1.00) peso or fractional part thereof if the ticket exceeds one peso. 2. In the imposition of the rate of tax on winnings, the Executive Order now classifies the class of the winning bets and prescribing two (2) rates of tax. In the case of winning from double, forecast/quinella and trifecta bets, the tax on the winnings shall only be four (4%) per centum . Winnings on all other bets including the prize on the winning horses is subject to ten (10%) per centum . It shall be noted also, that the winnings in horse races regardless of the class of the bet is also subject to the 20% final (income) withholding tax prescribed under Sec. 21 (c) (1) in relation to Section 51 of the Tax Code, as amended by Executive Order No. 37 dated November, 1985. Henceforth, the operator, manager or the person in-charge of the horse races shall also withhold the 20% final income tax on the winnings and remit to the BIR in accordance with Revenue Regulations No. 1-82 as amended. The foregoing amendments is made effective on June 16, 1987. All internal revenue officers and others concerned are hereby enjoined to give this Memorandum Circular a wide publicity as possible. (SGD.) BIENVENIDO A. TAN, JR. Commissioner