Pay Tax to Claim a Prize Scam

What the prize tax scam looks like

The scam almost always arrives as good news. You get a phone call, a text, an email or a message on a chat app telling you that you have won a lottery, a lucky draw or a casino promotion you may not even remember entering. There is a prize waiting, sometimes a large one. There is just one step left: you must pay a tax, a betting duty, a processing fee or a "clearance charge" before the money can be released.

The demand is the whole point. The scammer is not interested in your ticket or your account; the "tax" is the product. Once you pay the first amount, a second fee often appears, then a third, each explained as a final requirement. The prize never existed. The money you sent is gone, and because these payments are usually asked for by wire transfer, prepaid card or cryptocurrency, they are very hard to trace or recover.

A version of this aimed at gamblers works the same way. A website or app that looks like a betting or casino site shows you a balance you have "won," then says a withdrawal tax must be paid before the funds can move. Legitimate gambling sites never work like this: real operators pay winnings out and let the tax system take its share separately, as explained on our page about withholding tax on winnings.

The clearest official warning of this pattern comes from Hong Kong. The Inland Revenue Department tells the public to stay alert if they are notified of winning a cash prize and then asked to pay betting duty on it, because the department never demands betting duty from winners of lucky draw prizes and never issues them betting duty bills or receipts². In other words, the tax authority itself has confirmed that this exact demand, in its own name, is a sham.

The scam borrows real vocabulary to sound plausible.

Scammers take these words and reverse the direction of payment. That reversal is the tell.

Why real lottery taxes are never paid upfront

Every legitimate tax on winnings in the jurisdictions covered here follows one rule: the money comes to you first, or the tax comes off the top. You never send tax money out to unlock a prize.

The mechanics differ by country, but the direction is always the same.

In Thailand, a winner claiming a government lottery prize at the Government Lottery Office pays stamp duty of THB 1 for every THB 200 of prize money, or fraction of THB 200, and this is settled as part of the claim process, with the payout details, including the duty and tax, shown on screen for the claimant to confirm before payment⁶. Charity lottery prizes have 1 percent withholding tax taken at source and remitted to the Revenue Department⁷. A foreign winner simply brings a passport or government-issued document together with the winning ticket⁷.

In the Philippines, the Philippine Charity Sweepstakes Office pays prizes above PHP 10,000 and up to PHP 60,000 in cash, net of a 20 percent final tax, and larger prizes by check, also net of the 20 percent tax⁵. The winner walks away with the net amount; there is no separate bill.

In Japan, winnings from online purchases of Toto sports betting are transferred automatically to the customer's registered bank account, with no claim step and no fee⁸. The tax treatment, where it applies, happens through your annual income tax filing, not at the moment of payout.

In Singapore, winnings from betting or lottery, including Toto and 4D, are simply not taxable at all, and you do not need to declare them in your Income Tax Return.

The pattern holds everywhere: the operator, the lottery office or the tax system handles the deduction. The one thing no genuine process ever requires is for the winner to reach into their own pocket before seeing a single dollar of the prize. If someone asks you to do that, the prize is not real.

How tax is actually withheld: 20% on winnings over CNY 10,000 in China

China shows the withholding model at its cleanest. Lottery winnings are classified as incidental income under the Individual Income Tax Law, taxed on the full amount of each winning⁹. The rate is a flat 20 percent¹.

Crucially, the winner does not pay this tax. The lottery institution or sales outlet does. When you redeem a prize, the institution withholds the individual income tax and files the tax declaration on your behalf. The official worked example: a CNY 100,000 instant lottery win has CNY 20,000 withheld by the lottery institution, which then handles the tax filing for the winner¹⁰. You receive CNY 80,000; the paperwork is done for you.

The same announcement covers the administrative edge cases. For computer lottery single winnings over CNY 3,000 up to CNY 10,000 inclusive, the institution files an exemption declaration for the winner, and for single winnings over CNY 10,000 from computer lottery and instant lottery, it files a tax declaration¹. When a computer lottery payout exceeds CNY 3,000, the winner's real-name identity and redemption information must be registered, and winners are asked to cooperate with that registration¹¹.

One more rule matters for anyone holding several tickets: for computer lottery, all prizes won by the same person in the same draw of the same game count as one single winning income⁹. So ten tickets each paying CNY 2,000 in the same draw are taxed as one CNY 20,000 win, not as ten exempt small wins.

The contrast with the scam could not be sharper. In the real Chinese system, the winner never pays anything to anyone; the money flows only toward the winner, minus the withheld tax. For more on how these deductions work across the region, see our page on withholding tax on winnings.

The CNY 10,000 exemption for single winnings

Most Chinese lottery winners never encounter tax at all, because of a long-standing exemption: single winnings from the welfare lottery and sports lottery not exceeding CNY 10,000 are temporarily exempt from individual income tax¹². This policy dates back to the 1990s and continues in force after the 2024 announcement restated it¹¹.

The line is a cliff, not a slope. If a single win does not exceed CNY 10,000, no tax. If it exceeds CNY 10,000, the full amount is taxed at 20 percent, not just the excess¹¹. A win at or below CNY 10,000 is tax free; a win above it is taxed on the whole prize.

This exemption is why the scam sometimes quotes plausible small amounts. A fraudster asking for a few hundred yuan in "tax" on a modest prize is counting on the victim not knowing that most small Chinese lottery wins carry no tax at all. If you are told a prize of CNY 10,000 or less needs a tax payment first, the real answer is that a genuine win at that size would be paid to you in full.

For a broader comparison of where the tax-free lines sit across the region, see our page on tax-free thresholds for lottery and gambling prizes.

Hong Kong: winnings are tax free, so any tax demand is a scam

Hong Kong is the simplest case in Asia, and the Inland Revenue Department has said so in terms. It does not charge betting duty on winners of ordinary lucky draw activities and does not issue betting duty documents to them¹³. Anyone who tells you that you must pay betting duty to release a Hong Kong prize is committing a fraud in the tax authority's own name.

The department's warning is explicit: members of the public who are notified of winning a lucky draw and then asked to pay betting duty on the prize should be on guard against being cheated¹³. That is the department describing this exact scam pattern and telling you it is not real.

Betting duty does exist in Hong Kong, but it falls on licensed gambling operators, not on winners. The distinction is worth remembering because scammers use the real name of the tax to sound official. For more on how operator-level duties work and why they never reach the player's pocket directly, see our page on how gambling duties affect players.

Singapore sits in the same place as Hong Kong on this question. Winnings from betting or lottery are not taxable because they are windfalls, not income, and they do not need to be declared. A "tax demand" on a Singapore prize is just as fake as one in Hong Kong.

Vietnam: the VND 20 million threshold under the Personal Income Tax Law

Vietnam gives a worked example of how a real threshold works, and how scammers can misuse the number.

Under the Personal Income Tax Law 2025, which takes effect July 1, 2026, taxable income from winnings is the part of the prize value exceeding VND 20 million that the taxpayer receives³. Before that date, the threshold under the earlier rules was VND 10 million per win¹⁴. The law also draws a distinction within gambling: winnings from betting are taxable, while winnings in casinos are exempt³.

Where a prize is taxable, the tax is handled at the point of payment. If the prize is in cash, the tax is withheld in cash; if the prize is in kind, the winner receives goods of lower value after the tax deduction, or the goods are sold and the winner is paid in cash after withholding¹⁵. The winner is never asked to find the tax money separately.

A few practical rules round out the picture. Where one prize has multiple winners, the taxable income is divided among them, and the winners must present legal proof of the split; otherwise the whole prize is counted as one individual's income, and multiple prizes in one game are taxed on their total value¹⁴. These are exactly the kinds of details a scammer gets wrong, because the scam has no interest in how the prize is actually structured; it only wants the fee.

If you are asked to pay a Vietnamese tax on a prize before receiving it, compare the demand with the real system: the threshold, the withholding at payment, and the cash-or-in-kind rules all show the tax coming off the prize, never out of your pocket in advance.

What legitimate operators and lotteries will never ask you for

Pulling the threads above together, here is what no genuine lottery, casino or tax authority in the region will ever do:

• Ask you to pay a tax, duty, fee or clearance charge before releasing a prize or withdrawal. Real tax is withheld from the payout or deducted at the counter, as in China¹⁰, the Philippines⁵ and Thailand⁶.
• Issue a betting duty bill to a lucky draw winner in Hong Kong; the Inland Revenue Department states it never does this².
• Ask you to wire money to a personal account, pay by prepaid card or send cryptocurrency to "activate" a prize. Real payouts go the other way: by check, by transfer to your own bank account, or in cash at a counter. Thailand's Government Lottery Office pays prizes by check or bank transfer to the claimant's account⁶, and its digital lottery app transfers winnings to a linked Krungthai bank account or pays them at the office¹⁶.
• Ask you to keep the win "confidential" as a condition of claiming. Real lotteries publicize winners with their consent; secrecy is a scammer's tool to stop you checking with anyone.
• Ask for a fee to release winnings already showing in an account on a gambling site. Legitimate sites transfer winnings automatically to your registered account, as Japan's Toto online service does⁸.
• Demand tax on a prize that is exempt. In China, single wins up to CNY 10,000 carry no tax at all¹²; in Hong Kong and Singapore, winnings are not taxable¹³.

One genuine cost does exist and is worth knowing so it cannot be used against you. In Thailand, claiming a government lottery prize through a partner bank, agency or platform carries an additional service fee set by that service provider⁴. This is a small, disclosed charge deducted in a documented process at a physical counter or official channel, not an upfront payment to a stranger. And presenting a forged or altered ticket carries real consequences: the Government Lottery Office takes legal action, criminal or civil, against dishonest claimants⁴, and China's sports lottery rules send anyone who forges a ticket or fraudulently claims a prize to the judicial authorities¹⁷. Scammers sometimes exploit the fear of these rules; honest winners with a real ticket have nothing to fear from them.

Who to contact if you have been asked to pay

If someone has asked you to pay a tax or fee to release a prize, act on three fronts.

First, stop the payment. Do not send money, do not share banking details, copies of your ID or one-time codes, and do not continue negotiating. Any money already sent is unlikely to be recovered, which is why the first response is always to stop.

Second, report it. Report the caller, message or website to your local police or anti-scam hotline in the country where you are. If the scam used a tax authority's name, as the Hong Kong betting duty version does, you can notify that authority; the Inland Revenue Department's public warning is the channel through which it tracks this fraud². Keep the messages, numbers and account details as evidence.

Third, check the prize independently. Every real lottery has an official claim route that does not run through whoever contacted you. Thailand's Government Lottery Office publishes prize-checking and claim procedures on its own site⁶; China's welfare and sports lottery institutions redeem prizes at official outlets with real-name registration¹¹; the Philippine Charity Sweepstakes Office pays prizes at its outlets, branch offices or main office Treasury Department⁵. If the "winner notification" you received cannot be verified through the operator's own published channel, it did not come from the operator.

If the approach came through a gambling site rather than a lottery, the same logic applies: check the operator's published withdrawal process, and be aware that a site demanding an upfront withdrawal tax is not following any legitimate process in the region. For how genuine payouts and their tax treatment work in practice, see our guides to when winnings are taxed and tax on lottery winnings in Asia.

The single sentence to remember: in Asia, tax on winnings is always taken out of the prize, never paid into it, and anyone who says otherwise is asking for your money, not giving you theirs.