Amendments to Section 229 of the National Internal Revenue Code by Executive Order No. 194 dated June 16, 1987

July 15, 1987 REVENUE REGULATIONS NO. 04-87 SUBJECT : Amendments to Section 229 o f the National Internal Revenue Code by Executive Order No. 19 4 Dated June 16, 1987 TO : All Internal Revenue Officers and Others Concerned Pursuant to the provisions of Section 227, in relation to Section 165 (b) of the National Internal Revenue Code of 1986, these regulations are hereby promulgated to govern the manner of reporting tax on winnings from horse races, for tax purposes. SECTION 1 . Definitions of Terms : For purposes of these regulations, the following terms shall be understood in the sense given below: (a) Daily Double It is an event wherein the bettor selects a number in each of two consecutive races and the selection in each race must finish first. (b) Extra Double It is an event wherein the bettor selects a number in each of two (2) selected races and the selection in each race must finish first. (c) Forecast It is an event wherein the bettor selects two numbers in a selected race, and the selection must finish first and second in the correct order. (d) Double Quinella It is an event wherein the bettor selects two numbers in each of the two selected races, and the selection in each race must finish first and second in either order. (e) Trifecta It is an event wherein the bettor selects three numbers in a selected race and the selections must finish first, second and third in the correct order. (f) Winner Take All It is an event wherein the bettor selects the most number of winners from the seven (7) designated races of the day as shown in the race progra m. aisa dc (g) Pick-Six It is an event wherein the bettor selects the six (6) winners from the six (6) designated races of the day as shown in the program. (h) Quartet It is an event wherein the bettor selects four numbers which should arrive at finish line in the right order, such as 1st place, 2nd place, 3rd place and 4th place, respectively. (i) Pari-Mutuel Two forms of betting: (1) Win It is an event wherein the bettor selects a number in a particular race and the selection must finish first. (2) Place It is an event wherein the bettor selects a number in a particular race and the selection must finish either first, second or third. SECTION 2 . Tax on Winnings from Horse Races : (a) Tax on Winnings 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. (b) Mode of Collection The tax herein prescribed shall be deducted from the "dividends" corresponding to 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 person entitled thereto. (c) Time of Payment and Return Required to be Filed It shall be the duty of the operator or person in charge of horse races to file a true and correct return on the tax on winnings or "dividends" in the amusement tax return (BIR Form No. 3701A) showing for each class of bets, the total number and amounts of the tickets sold, the unit price or cost of the tickets, the total number and amounts of winning tickets, the net amount which is the basis of the tax on winnings, the total amount of tax on winnings withheld, and pay the tax due thereon to the collection agent of the city or municipality where the main office is located, or to the authorized agent bank of the Central Bank within twenty (20) days from the time the tax was deducted and withheld. (d) Additions to the Tax If the tax is not paid within the time prescribed above, the amount of the tax shall be increased by a surcharge of twenty five (25%) per centum , the increment to be part of the tax and the entire amount (tax and surcharge) shall be subject to interest at the rate of twenty (20%) per cent per annum . In case of willful neglect to file the return within the period prescribed herein, or in case a false or fraudulent return is willfully made, there shall be added to the tax or to the deficiency tax in case any payment has been made on the basis of such return before the discovery of the falsity or fraud, a surcharge of fifty (50%) per centum of its amount and the entire unpaid amounts (tax and surcharge) shall be subjected to interest at the rate of twenty (20%) per cent per annum. The amount so added to any tax shall be collected at the same time and in the same manner and as part of the tax, unless the tax has been paid before the discovery of the falsity or fraud, in which case, the amount so added shall be collected in the same manner as the tax. casia SECTION 3 . Revenue Regulations No. 14-67, Revenue Regulations No. 15-77 and all orders, issuances and rules or part thereof inconsistent with these regulations are hereby repealed or modified accordingly. SECTION 4 . Effectivity . The new rate of tax on winnings of horse races became effective on July 15, 1987. (Sgd.) JAIME V. ONGPIN Secretary of Finance Recommending Approval: (Sgd.) BIENVENIDO A. TAN, JR. Commissioner