Pacquiao staggered by BIR tax punch

One of the world’s richest athletes, boxing icon Manny Pacquiao, is fighting out of the ring with the Bureau of Internal Revenue whose head, Kim Henares, says that “Filipinos generating income abroad] have to report and show proof that taxes had been paid.” INQUIRER AND AP FILE PHOTOS

GENERAL SANTOS CITY, Philippines—One of the world’s richest athletes, boxing icon Manny Pacquiao, is fighting out of the ring with the Bureau of Internal Revenue (BIR) over a P2.2-billion tax delinquency case.

“My lawyers will eventually settle that issue with the BIR,” said Pacquiao, who returned on Monday to a hero’s welcome in his hometown directly from Macau after his masterful conquest of Mexican-American Brandon Rios in a welterweight bout.

The BIR issued a warrant of “distraint” early this year against the bank accounts of the eight-division boxing champion after it said he failed to remit taxes amounting to P2.2 billion to the government on his earnings from top-billed prizefights in the United States in 2008 and 2009.

Under the National Internal Revenue Code, the issuance of the warrant is allowed as a civil remedy to collect taxes from delinquency.

The amount being demanded by the BIR is much bigger than the P1.8 billion in total assets and net worth declared by Pacquiao, who is also Sarangani representative, in his statement of assets, liabilities and net worth (SALN).

Court case

Pacquiao did not pay the amount or protested the BIR assessment, but instead filed a case in the Court of Tax Appeals (CTA) in Quezon City to nullify the warrant.

Last week, the CTA issued a “status quo ante” order restraining both parties from engaging in any action against each other pending a review of the case. It will issue a ruling on Dec. 5.

In a press conference late Tuesday afternoon, however, Pacquiao unleashed punches against the BIR, insisting that his conscience is clear and that all his tax liabilities with the government were properly paid. He appealed to the agency to lift the warrant.

“There are many crooks in the government whose bank accounts and properties were not subjected to garnishment,” he said in Filipino. “I had absorbed many blows just to earn money and give pride to the nation, but this is what happened.”

“I could not withdraw a single centavo from my own money,” he claimed. “I could not use my money to help especially those who are victims of the calamity.”

Borrowing from friends

He said he had to borrow money from friends to keep his promise to help the survivors of Supertyphoon “Yolanda” in the Visayas. His plan to distribute relief items to them might be delayed because of the BIR action, he added.

The BIR confirmed the local bank accounts of Pacquiao and his wife, Jinkee, had been frozen, Agence France-Presse (AFP) reported. “According to the collection division we have issued a garnishment of his bank accounts,” Dino Somera, litigation division official of the tax bureau, told AFP.

Somera said he did not know how much money was in the bank accounts of the couple, the AFP report added.

Pacquiao explained that the tax case stemmed from his failure to include the multimillion-dollar taxes deducted by the US Internal Revenue Service from his 2008 and 2009 fight earnings when he reported his income to the BIR.

“The IRS gave us a copy of the taxes deducted from my earnings covering that period. Unfortunately, the BIR refused to honor the copy of tax deduction credited by the IRS,” he said.

He claimed that the BIR was demanding a certified true copy of the IRS document.

In Manila, Revenue Commissioner Kim Henares said a Filipino who generated income in another country during a temporary visit and remitted the corresponding income tax to that country’s government would still have to fulfill certain obligations to the BIR.

In particular, she said, the individual should still report to the BIR the earnings generated abroad and provide documentary evidence that the corresponding taxes had been paid to the foreign government.

“They [Filipinos generating income abroad] have to report and show proof that taxes had been paid,” Henares told the Inquirer.

Tax treaty

The Philippines and the United States have a tax treaty, which is meant to prevent “double taxation”—which happens when an individual pays full income tax in the foreign country and also pays full income tax in the Philippines for the same income.

But Henares said such treaty did not automatically exempt any Filipino from reporting to the BIR and submitting documents that would prove claims of tax payments.

“He [Pacquiao] had been given the opportunity to show this [proof of tax payment to the United States] for the past two years, but he failed to do so,” she said.

His legal counsel, Franklin Gacal Jr., earlier said Pacquiao was not engaged in “hocus-pocus” when it came to declaring his earnings as a boxer.

“He could not hide his total earnings. The BIR could easily monitor it because all his commercial endorsements and boxing fights were covered with contracts,” Gacal said.

Typhoon relief

Pacquiao said he would keep his promise to visit areas ravaged by Yolanda and distribute relief items to survivors who have hardly received assistance. His mother, Dionisia, hails from Leyte province.

“With God’s help, we will always find a way. We will overcome this challenge,” he told the Inquirer by phone.

Pacquiao said he might fly out to the Visayas Wednesday or Thursday and would ask his mother to accompany him. “My wife can’t join because she’s pregnant and the trip might endanger her condition,” he explained.

He said he had been eager to visit the typhoon-ravaged areas even before his fight in Macau, but his American coach, Freddie Roach, advised him to postpone it as he was at the final stage of his preparations against Rios.

The Filipino ring sensation has dedicated his victory over Rios to his countrymen, particularly the typhoon survivors.

Pacquiao, known to be generous in sharing his blessings, said he could not say yet how much he was donating to the survivors. “We should find out how many have not yet received aid or had been given only once since the relief operations began,” he said.

Last year, Forbes magazine listed him as the 14th-highest-paid athlete globally with an estimated $34 million in earnings.—With an AFP report

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