Too early to talk of tax amnesty for Pacquiao

The possibility of extending amnesty to world boxing champion Manny Pacquiao (shown after winning his bout with Brandon Rios in Macau on Nov. 24, 2013) for allegedly misdeclaring his income in 2009 is “a bridge that is too far away yet,” President Aquino said on Tuesday, Dec. 3. AP PHOTO/VINCENT YU

MANILA, Philippines—The possibility of extending amnesty to world boxing champion Manny Pacquiao for allegedly misdeclaring his income in 2009 is “a bridge that is too far away yet,” President Aquino said on Tuesday.

Aquino noted that Pacquiao, the representative of the lone district of Sarangani, had not even owed up to his tax deficiencies.

“I think the lesson has to be that if you are guilty of a particular crime, then…you have to exhibit a degree of remorse. But, at this point in time, he says that he has complied with all the requirements. So I think this is crossing the bridge that is too far away yet,” said Aquino, when interviewed at the 27th annual Bulong Pulungan Christmas Party.

Aquino explained that any amnesty proposal would emanate from his office and should be approved by Congress.

“Amnesty is (a) proposal by me (which) has to normally indicate, perhaps, a class of individuals, a group. It doesn’t refer normally to an individual,” said the President, when asked if he would be open to extending amnesty to Pacquiao.

An amnesty does not extinguish a taxpayer’s liabilities as it only condones penalties and does away with imprisonment for tax-evasion cases.

On Thursday, Revenue Commissioner Kim Henares said that Pacquiao “technically 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.

Pacquiao’s gross income should have been closer to or even more than P1 billion, claimed Henares, who froze his bank accounts for allegedly failing to settle P2.2 billion in tax deficiencies.

Pacquiao, one of the world’s richest athletes, had just returned from a convincing victory over American Brandon Rios in a welterweight match in Macau when news about his tax problems resurfaced.

He protested the Bureau of Internal Revenues (BIR) move to freeze his bank accounts, insisting he had already furnished the bureau copies of tax returns submitted to the US Internal Revenue Service to show that he had paid his income taxes.

Pacquiao said he was not hiding or running away from his tax responsibility, and expressed confidence that the issue would be settled soon.

The BIR started to investigate and audit Pacquiao in late 2010 after an “abrupt” drop in his ranking among the country’s top taxpayers, said Henares.

From 2006 to 2008, Pacquiao was in the top 10 percent of highest taxpayers but he slid to the top 30 percent in 2009.

When the BIR audited him for his 2008 and 2009 income tax returns (ITRs), Pacquiao did not submit any documents, thus prompting the agency to subpoena him. He responded by executing an affidavit declaring his US income and tax payment in his 2008 ITR but without any supporting documents.

In that instance, Henares said the BIR did not become strict in asking documentation and allowed him to claim tax deductions.

But when Pacquiao claimed tax deductions for expenses, he was unable to provide documentation, she said. The BIR then assessed that he had P769 million in tax obligations, including value-added tax.

On his 2009 ITR, Henares said Pacquiao did not declare any US income but only less than P50 million earned in the Philippines, thus the “underdeclaration.”

The agency estimated his tax obligations for 2009 at P1.433 billion based on his income in the United States from “public information” on his bouts there and shares from pay-per-view and online ticket purchases, as well as endorsements.—With a report by Christine Avendaño