Dec 13th 2013
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By Teresa Ambord, Correspondent
Boxer Manny Pacquiao had enough troubles holding off the tax authorities in his Filipino homeland. The Bureau of Internal Revenue (BIR) of the Republic of Philippines said he owed an enormous tax bill relating to income he earned fighting matches in the United States in 2008 and 2009. A tax agreement between the two countries means citizens of one country will not be double taxed when they earn income in the other country. However, BIR Tax Commissioner Kim Henares says Pacquiao never paid taxes to the IRS on his US income; therefore, he owes tax on that money in the Philippines.
Even if he had paid the IRS, Henares said he would still owe some taxes to the Philippines, since the applicable tax rate in the United States at the time was 2 percent lower than in the Philippines. That difference would be due the BIR.
According to Henares, he owes 2.2 billion pesos, the equivalent of $50.2 million. He's had two years, she said, to provide proof that he paid his US tax bill. Finally, the BIR has frozen his assets and put a lien on some property, making him unable to pay his staff. In 2013 he was fourteenth on Forbes' list of top-paid athletes, with earnings of $34 million, yet he told reporters in order to help victims of Super Typhoon Haiyan (Yolanda) that recently hit his country, he had to borrow money, a claim Henares says is his own fault.
Pacquiao; his promoter, Bob Arum (of Top Rank); and his attorney, Tranquil Salvador, have said all along that his defense against the Filipino tax was that he really did pay the tax owed to the United States. Again, Pacquaio has maintained that the BIR claims of tax delinquency are false, because he paid his US tax bill. Arum says the proof is on the way, in the form of certified documents, which will prove Pacquiao paid tax in the United States.
That's What They Said
Unfortunately, now the IRS is backing Pacquiao into another corner. It claims he not only is delinquent on tax for those years (to the tune of $11 million), but that he also never paid tax on his US earnings from 2006, 2007, or 2010. That, they say, leaves him owing a total of $18,313,669.
When Pacquiao's problems with the BIR first became known, he appeared to be working with an astute tax strategist, who was advising him where to accept fighting matches and to legitimately minimize his tax. Now the jury is out on what his tax fate will be.
Meanwhile, Pacquaio is embarking on his own public campaign to redeem his image, by appearing all of the major TV networks in the Philippines, accusing the BIR of harassment. "I'm not a criminal or a thief. I am not hiding anything. I will face my problems as they come."