Increasing the Rates of Tax on Winnings in Jai-Alai and Horse-Racing and the Share of the Government from the Sweepstakes Total Prize Fund

October 15, 1977 REVENUE MEMORANDUM CIRCULAR NO. 45-77 SUBJECT : Increasing the Rates of Tax on Winnings in Jai-Alai and Horse-Racing and the Share of the Government from the Sweepstakes Total Prize Fund TO : All Internal Revenue Officers and others concerned For the information and guidance of all concerned, there is quoted below Section 260-A of the National Internal Revenue Code and Section 4 of Republic Act No. 1169, as amended by Presidential Decree No. 1157, dated June 3, 1977: SECTION 1. Section 260-A of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: 'SECTION 260-A. Tax on winnings . Every person who wins in horse races or Jai-Alai shall pay a tax equivalent to ten 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. The tax herein prescribed shall be deducted from the "dividends" corresponding to each winning ticket and withheld by the operator, manager, or person in charge of the horse-races or Jai-Alai before paying the "dividends" to the person entitled thereto. The same tax shall be collected from owners of winning race horses at the same time and in the same manner above.' SECTION 2. Section 4 of the Republic Act Numbered 1169 is hereby amended to read as follows: 'Section 4. Holding of sweepstakes . The Office shall hold charity horse race sweepstakes under such regulations as shall be promulgated by the Board in accordance with Republic Act Numbered 309: Provided , however , That when the holding of a sweepstakes race to determine prizes is impossible due to war, public calamity, or other unforeseen or fortuitous event, or when there is no sufficient number of horses to determine the major prizes, the Board of Directors may determine the procedure to be followed in the distribution of prizes in the most just, equitable and expeditious manner. The horse races and the sale of tickets in the said sweepstakes shall be exempt from all taxes, except that each ticket shall bear a twelve-centavo internal revenue stamp and that from the total prize fund as provided herein from the proceeds of the sale of tickets, there shall be deducted an amount equivalent to five per centum of such total prize, which shall be paid to the Bureau of Internal Revenue not later than ten days after each sweepstakes in lieu of the income tax heretofore collected from sweepstakes prize winners: Provided , however , That any prizes that may be paid out from the resulting prize fund, after said five per centum has been deducted, shall be exempt from income tax. The tickets shall be printed by the government and shall be considered government securities for the purposes of penalizing forgery or alteration.' SECTION 3. This circular shall take effect immediately. Features of the Amendment 1. Section 260-A.. The amendments introduced by Presidential Decree No. 1157 to Section 260-A of the National Internal Revenue Code are: a. Increase of the rate of tax on winnings from horse races from 5% to 10%. b. Increase of the rate of amusement tax from Jai-Alai winnings from 5% to 10%. 2. Section 4. The amendment increases the rate of tax on sweepstakes total prize fund from 1-1/2% to 5%. 3. Effectivity. The new rate of tax of 10% on Jai-Alai and horse race winnings or dividends and the tax of 5% on the sweepstakes total prize fund became effective on June 3, 1977. Enforcement All internal revenue officers and others concerned are enjoined to be guided accordingly and to give this circular as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8