Pacquiao will pay proper taxes – lawyer

MANILA, Philippines - New World Boxing Organization welterweight champion Manny Pacquiao will definitely settle his tax obligations, including the one on his earnings from his recent successful fight with American Timothy Bradley, one of his lawyers assured the Bureau of Internal Revenue (BIR) yesterday.

“Cong. Pacquiao has been consistent in saying that he will comply and abide with all the tax requirements of the taxing authorities,” lawyer Tranquil Salvador said.

Reports said Pacquiao earned some $20 million in prize money for his latest fight in the US last Saturday.

Salvador issued the statement after BIR Commissioner Kim Henares said on Monday that the agency is determined to get Pacquiao to settle his back taxes, which have now ballooned to about P2.65 billion due to interest charges.

Pacquiao’s lawyers have filed a petition before the Court of Tax Appeals (CTA) questioning the BIR’s assessment of his tax liabilities.

Pacquiao has other earnings from his fight with Bradley, including from endorsements and pay-per-view television subscriptions in the United States.

“He should report all his US earnings and tax payments to the BIR so as not to complicate his tax problems with the bureau,” Henares said on Monday.

Pacquiao’s lawmaker-colleagues also urged him yesterday to settle his tax case with the BIR immediately.

Rep. Elpidio Barzaga Jr. of Dasmariñas City in Cavite, who is an accountant-lawyer, said it should not be difficult for Pacquiao to resolve his tax issues.

“All that Commissioner Henares is asking him to do is to submit documents on his earnings and tax payments in the United States. I do not know why his accounting and finance people are finding that hard to do,” he said.

He said income and tax payments in the millions in the US are supposed to be documented.

“You cannot earn $20 million there and not pay income tax. The US Internal Revenue Service (IRS) will go after you. Unless Manny’s camp is saying that they did not pay income taxes there,” he added.

Barzaga noted that there were reports that IRS has assessed Pacquiao an income tax deficiency of $18 million.

He said if his colleague had paid taxes in the US, he should not be paying income tax in the Philippines for his earnings in America.

“But he should pay income tax and other taxes here for his earnings and services here,” he said.

He said the tax assessment that the BIR had sent to Pacquiao included income from local endorsements.

BIR’s poster boy

For his part, Isabela Rep. Rodolfo Albano III said the boxing icon would endear himself more to his fans if he resolves his tax issues.

“He will not only be a hero in boxing but in terms of tax compliance as well,” he said.

He noted that Pacquiao was once BIR’s poster boy for tax compliance.

Albano said his colleague may not owe the BIR anything if he could properly explain and document his earnings, expenses and tax payments.

Over the weekend, Henares urged the boxing champion to report his income and tax payments in the US in connection with his victory over Bradley so as not to complicate his tax problems with the BIR.

In a television interview, Henares said Pacquiao would be paying tax in the US on his reported $20-million prize money and other earnings, like from endorsements and pay-per-view television subscriptions in the US.

She said the BIR would continue to demand that he settle the P2-billion tax assessment issued to him.

She said what the Sarangani congressman has so far paid is about P30 million in past-due value-added tax but paid nothing on his income tax liabilities for previous years.

In June 2012, the BIR demanded that Pacquiao and wife Jinkee pay more than P2.2 billion for taxable years 2008 and 2009.

According to the bureau, Pacquiao had an income tax liability of P762.5 million and VAT due of more than P4.3 million for 2008.

For 2009, the BIR hopes to collect from Pacquiao P1.4 billion in income tax and P26.7 million in VAT.

In 2008, Pacquiao had three fights in the US with Juan Manuel Marquez, David Diaz and Oscar dela Hoya. In 2009, he fought Ricky Hatton and Miguel Cotto.

His promoter, Top Tank, reportedly paid him a total of $12.9 million for 2008 and $14.9 million for 2009.

Henares said the BIR “waited for two years for him to submit the documents, but he failed to do so.” 

At Malacañang, Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office said there was never an intention on the part of Henares to humiliate Pacquiao when she reminded him of his tax dues.

Coloma noted that Henares was only answering questions from journalists when she talked about the boxing legend’s tax predicament.

“She was asked, and being a public official it was her duty to answer, especially on an issue that is of public interest,” Coloma explained. “So there is a need to clarify that she did not start the discussion because we’ve been hearing loose talk that the commissioner was a spoiler – for bringing up the issue while the nation was still celebrating,” he said in Filipino.

He emphasized that Henares had never issued an open declaration or criticism of Pacquiao’s tax liabilities and that all her statements were answers to reporters’ queries.

Coloma also said he is leaving it up to members of the House of Representatives to determine who among the individuals who had given honor to the country were deserving of tax breaks as proposed in a bill authored by Valenzuela Rep. Magtanggol Gunigundo. “Let them discuss that. After all, they’re the lawmakers,” Coloma said. – With Jess Diaz, Delon Porcalla