Why Manny Pacquiao’s tax liability reached P2.2B?


Philippine boxing icon Manny Pacquiao misdeclared his income in 2009 when he stated in his tax return that he earned only less than P50 million in the Philippines and when he failed to include his earnings from his two fights in the United States that year.

The Bureau of Internal Revenue said the P2.2 billion in tax liabilities covering 2008 and 2009 stemmed partly from Pacquiao’s failure to present proper documentation of his tax payments to the Internal Revenue Service (IRS) of the United States and to pay value added tax.

Here's a quick look at Pacquiao's guaranteed earnings since 2008 from boxing:
2008. David Diaz - $3M
2008. Oscar dela Hoya - $6M
2009. Ricky Hatton - $12M
2009. Miguel Cotto - $13M
2010. Joshua Clottey - $12M
2010. Antonio Margarito - $15M
2011. Shane Mosley - $20M
2011. Juan Manuel Marquez III - $22M
2012. Juan Manuel Marquez IV - $23M
2012. Timothy Bradley - $26M
2013. Brandon Rios - $18M

Pacquiao’s gross income for taxable year 20008 was estimated at P1.5 billion. The amount took into account earnings from his fights abroad, his share in income from “pay-per-view” cable services that aired his fights, and his endorsements of various brands. The fact that Pacquiao failed to pay the P340 million in income tax liability only made things worse for him because of the surcharges and interests on unpaid tax liabilities. Also, the BIR imposed a cumulative interest of P250 million for the four years that the boxer failed to pay the income tax liability.

For 2009, the lawyer said, Pacquiao’s estimated gross income was higher at about P2 billion. Pacquiao did not report any income tax payment to the US government. The surcharge amounted to P344 million, while the cumulative interest for the three years that the liability remained unpaid amounted to P373 million. The unpaid VAT liability, including surcharge and interest, was P26.7 million.

Pacquiao’s total unpaid tax liabilities for 2008 and 2009 including the basic income tax plus the surcharges and interest amounted to P760 million and P1.4 billion respectively. The combined unpaid tax liabilities of Pacquiao for 2008 and 2009, therefore, is nearly P2.2 billion.

TAX CODE

A resident citizen is taxable on income derived from sources within and outside the Philippines. A resident citizen of the Philippines is allowed to claim tax credit, a taxpayer's right to deduct from the income tax due the amount of tax he has paid to a foreign country but subject to limitations.  It is not correct to say that since the US tax is already paid on his foreign income it would constitute double taxation when the same income from foreign source is subjected to Philippine income tax. Double taxation means taxing twice for the same purpose, by the same taxing authority, in the same jurisdiction, in the same period. Although there are actually two taxes being charged by the government, the foreign tax is imposed  by the US government while the other is imposed by the national government of the Philippines. Since there are two taxing authorities, the imposition is not a duplicate taxation.

In addition to the tax required to be paid, 25% penalty in case of failure to file the return and pay the tax on time or file the return with the proper person or pay on time the full amount of tax shown on any return or full amount of tax in case no return is required to be filed, 50% penalty in case of willful neglect to file the return on time or false or fraudulent return in willfully filed, and in case of deficiency or delinquency in the payment of tax, an interest at the rate of 20% per annum shall be imposed from the date prescribed for payment until the amount is fully paid, shall be imposed.

A VAT is a form of consumption tax imposed on each sale, barter, exchange, or lease of goods, properties, or services in the course of trade or business in the Philippines and importation of goods into the Philippines, whether or not in the course of trade or business.

SOLUTION

The solution is simple. Present the certified copy of your IRS to the Philippine tax bureau. If Pacquiao paid his taxes in the US, it should be reported to the BIR to be used as credit to his taxes in the Philippines.

TO PACQUIAO

Mr. Congressman, you are a lawmaker. You must be knowledgeable about the law. Stop using the BIR as an excuse for not being able to help the people. The only thing BIR have of your money is P1.1 million. The tax men only garnished two accounts.
Ignorantia juris non excusat. Stop being ignorant of law.

TO THE BIR

How about the Philippines' richest men? Back in 2006, the Philippine government had 'lost' a tax evasion case, which involved allegations that Fortune Tobacco Corporation had evaded paying P25 billion in taxes over the years 1990 through 1993, against business tycoon Lucio Tan.

Are you collecting the proper taxes? Is this politically motivated?

The tax system enables the government to generate much needed revenues to support and enhance public service. It also supports a more efficient public administration. Tax system is designed to foster national progress. It supports economic and public service infrastructure.


Author: Paul Michael Camania Jaramillo

Student| Youth Advocate | Leader | Environmental Advocate | Writer | Blogger | RH Advocate

I am neither especially clever nor especially gifted. I am only very, very curious. — Albert Einstein
I write about darkness because I want to show the light — Jose Rizal


He has been involved in different advocacy and defending human rights. As a blogger, writer, netizen and an advocate, he has found focus & interest on sexuality & reproductive health, deaf rights & legal access and youth development, leadership, environment advocacy, issues in the nation and in the world, religion, culture and human rights At the age of 14, he has fully embraced the call of leadership.

He was a Lussoc National High School 'The Sring' and 'Ang Batis' news editor. A radical visionary leader, he has led organizations of the Supreme Student Government, Science Club, Youth for Environment in Schools Organization, Interact Club, Math Club, Philippine National Red Cross and other organizations in their institution. He was also awarded as a distinguished student leader as a former officer of the Supreme Student Government and received President Gloria Macapagal Arroyo Campus Journalism Award. He attended two National Leadership Training for the Student Government Officers, Rotary Youth Leadership Awards, Youth for Environment Summer Camp, Science Leaders Congress and Schools Press Conference. Joined and won in the several contests from their school to the national level.

He is an organist and an officer of the Church of Christ (Iglesia Ni Cristo).

Paul is a BS Accountancy student at the Northwestern University. He works for CBAA Biznews and  The Blog of Innocence: SilentVoice Points. He is the College Editors Guild of the Philippines-Ilocos Chairperson. CEGP is the oldest and broadest intercollegiate alliance of student publications in the Asia-Pacific.


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