Withholding Tax on Prizes and Winnings in the Philippines: The 20% Final Tax Under NIRC Section 24(B)(1)

Prizes and winnings paid to an individual from Philippine sources are subject to a 20% final withholding tax under Section 24(B)(1) of the National Internal Revenue Code, except for prizes of ₱10,000 or less, which are instead reported as regular taxable income. The organizer or sponsor awarding the prize is the one responsible for withholding the tax before releasing the payout — the winner receives the net amount after tax, and generally has no further income tax obligation on that specific prize.

For the related final-tax rules on gambling winnings specifically, see RMC No. 57-2026: Casino Jackpot Prizes and Gambling Winnings Are Subject to Final Withholding Tax; for how final withholding tax differs from creditable withholding tax generally, see Final Withholding Tax vs Creditable Withholding Tax.

What counts as a “prize” under this rule? #

Section 24(B)(1) covers prizes and winnings an individual receives from Philippine sources — raffle prizes, contest winnings, promotional draw payouts, and similar awards — regardless of whether cash or property is given. It sits in the same NIRC provision as the final tax on interest, royalties, and other passive income, which is why prizes are taxed as a final tax rather than added to a recipient’s regular taxable income and taxed at graduated rates, except at or below the ₱10,000 threshold.

The ₱10,000 threshold: exemption or reclassification? #

A prize of ₱10,000 or less is not subject to the 20% final withholding tax, but that does not make it tax-free — it simply shifts the prize into the recipient’s regular taxable income instead of a flat final tax. The distinction matters for how it’s reported:

Because the ₱10,000-or-less prize becomes part of a recipient’s other income, someone who is otherwise not required to file an income tax return (for example, a purely compensation-income earner under substituted filing) may still need to account for it if their total income picture changes.

Who withholds, and how? #

The organizer or sponsor of the raffle, contest, or promotional activity is the withholding agent for prizes it awards, and must withhold and remit the 20% final tax before or upon release of the prize. In practice this means:

1. The organizer computes 20% of the prize’s cash value (or the fair market value, for non-cash prizes) before releasing it.
2. The organizer remits the amount withheld using the applicable final withholding tax return and Alphanumeric Tax Code (ATC) for prizes and winnings.
3. The winner receives the net prize and, because the tax is final, generally has no further obligation to report that specific prize as taxable income.

This is distinct from PCSO and lotto, where PCSO itself withholds directly from the payout under the same ₱10,000/20% framework, and from licensed casino and gaming winnings, which RMC No. 57-2026 confirmed are also final-tax withheld, with the gaming operator as the withholding agent.

What’s excluded entirely? #

Not every prize is taxable at all — NIRC Section 32(B)(7)(c) excludes certain prizes and awards from gross income if they meet specific recognition-based criteria. A prize is excluded (not merely taxed at a lower rate, but excluded from gross income) when all of the following apply:

• It is granted primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement.
• The recipient was selected without any action on their part to enter the contest or proceeding.
• The recipient is not required to render substantial future services as a condition to receiving the prize or award.

A national scientific achievement award selected by a panel, for example, can fall within this exclusion; a raffle prize a participant actively entered to win does not, because the recipient took action to enter.

Worked example #

A promo raffle winner receives a ₱50,000 cash prize from a retail chain’s anniversary promotion.

Because the prize exceeds ₱10,000, the retail chain withholds ₱10,000 before releasing the prize and remits it to the BIR. The winner receives ₱40,000 net and does not need to separately declare the ₱50,000 as taxable income, since the 20% final tax already satisfies the tax due on that specific prize.

Frequently asked questions #

What tax applies to prizes and winnings in the Philippines? #

Under Section 24(B)(1) of the National Internal Revenue Code (NIRC), prizes and other winnings derived by an individual from sources within the Philippines are subject to a 20% final withholding tax, except prizes amounting to ₱10,000 or less, which are instead added to the recipient’s other taxable income and subject to the regular graduated income tax rates.

Is there really a ₱10,000 exemption for prizes? #

There is a ₱10,000 threshold, but it is not a blanket exemption from tax — it changes how the amount is taxed. A prize of ₱10,000 or less is not subject to the 20% final withholding tax; instead, the recipient must include it as part of their other income and report it on their annual income tax return, where it is taxed at the regular graduated rates instead of a flat 20%.

Who is responsible for withholding the 20% tax on a prize? #

The person or entity awarding the prize — such as a raffle organizer, contest sponsor, or promotional activity organizer — is responsible for withholding the 20% final tax before releasing the prize to the winner, and for remitting it to the BIR using the applicable final withholding tax return and Alphanumeric Tax Code for prizes.

How is this different from PCSO/lotto winnings or casino jackpots? #

PCSO and lotto winnings follow the same ₱10,000 threshold and 20% final tax rate under Section 24(B)(1), but PCSO itself withholds directly from the payout. Casino and other gambling winnings are addressed separately — Revenue Memorandum Circular No. 57-2026 clarified that casino jackpot prizes and gambling winnings are also subject to final withholding tax, with the licensed gaming operator responsible for withholding rather than a private raffle or contest organizer.

Are all prizes and awards subject to this 20% tax? #

No. Prizes and awards that meet the criteria of NIRC Section 32(B)(7)(c) — granted primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement, where the recipient was selected without any action on their part to enter the contest and is not required to render substantial future services as a condition to receiving the prize — are excluded from gross income entirely and are not subject to the 20% final tax.

Summary #

Prizes and winnings over ₱10,000 from Philippine sources carry a flat 20% final withholding tax under NIRC Section 24(B)(1), withheld by the organizer before the payout is released; prizes of ₱10,000 or less fall out of that final-tax rule and are instead reported as part of the recipient’s regular taxable income. Recognition-based awards that meet Section 32(B)(7)(c)’s criteria are excluded from gross income entirely. For how this final-tax treatment compares to withholding taxes that are merely creditable, see Final Withholding Tax vs Creditable Withholding Tax.