Make Pacquiao pay P2.2-B back taxes, BIR urges CTA

24 October 2013

Manila, Philippines - Sarangani Rep. Manny Pacquiao must be compelled to pay P2.2 billion in back income taxes, the Bureau of Internal Revenue (BIR) said.

The state tax collection agency made this request after Pacquiao appealed for the Court of Tax Appeals (CTA) to nullify the BIR assessment for the years 2008 and 2009.

Pacquiao, who is busy preparing for his upcoming fight with Mexican-American Brandon Rios in Macau, had earlier told the CTA that the assessment, which included interests and surcharges, was “arbitrary.” He added that he could not afford to pay the taxes demanded as it was more than his net worth.

But BIR lawyers said that the tax debts have become “demandable, executor, and collectible” because the solon allegedly ignored to answer the final assessment notice (FAN) sent to him.

Under the Tax Code, FAN expires 30 days after receipt.

The deficiency tax reportedly stemmed from the failure of his accountants to apply the multi-million-dollar tax credits of the US Internal Revenue Service (IRS) in his income tax return (ITR).

Revenue officials explained that as a Filipino citizen, Pacquiao is required to declare his earnings from all sources all over the world in his ITR.

The boxing great told the tax court that he earned a total of $28 million in prize money for successfully defending his various titles against Juan Manuel Marquez, David Rios, Oscar de la Hoya in 2008, and Ricky Hatton and Miguel Coto in 2009.

Of the amount, he said the IRS collected $8.4 million or roughly about P395 million.

The lawmaker explained that he did not report the tax credit because the IRS had already collected the appropriate income tax.

Pacquiao declared he was no longer required to pay the taxes to the BIR because of the existing bilateral tax treaty agreement between Manila and Washington which stipulates that income tax paid by Filipinos in the US is creditable against his income tax liabilities here.

He added that what he paid the BIR was value-added tax (VAT) amounting to P12 million to cover the P114 million he earned as endorser of at least 14 products, including Ginebra San Miguel and United Laboratories.

Pacquiao insisted that the BIR assessment has no legal force because it was based on “best obtainable sources.”

He accused revenue probers of ignoring the financial reports submitted by his promoter, Top Rank Promotions, and other actual transaction documents, and relying only on the so-called “best obtainable evidence rule.”