Bureau of Internal Revenue Commissioner Kim Henares and Boxing champ Manny Pacquiao. (Composite Photo)
MANILA, Philippines - Boxing champ Manny Pacquiao may have won and reclaimed the crown but he may sorely lose financially to the tax bureau.
Bureau of Internal Revenue Commissioner Kim Henares said technically Pacquiao may not need to pay income tax from his $20 million fight purse if he submits proper documentation to prove that he paid the US Internal Revenue Service 40% income tax.
Henares explained the Philippines has a maximum income tax rate of 32%, so if he paid 40% in the US, he does not need to pay any tax in the Philippines, as far as the $20 million purse is concerned.
Henares said the documentation proving Pacquiao paid taxes in the US must be certified by the Philippine Consular Office to make it official.
In as far as Pacquiao's income from pay-per-view (PPV) and endorsements is concerned, the same applies for the income tax component. This means if he pays US taxes, he must present proof that it went through the certification of the consular office of the Philppines in the US.
The difference is that endorsements and pay-per-view have 12% value added tax. If the endorsements and pay-per-view income emanate from the Philippines, the 32% income tax and 12% VAT will have to be paid to the BIR where Pacquiao has until April 15, 2015 to pay.
When asked to comment on the common sentiments of ordinary people that Pacquiao has to take all the punches to earn money and honor for the country and yet BIR is running after him, Henares said: "Wala namang akong sinabing magpabugbog sya e... Everyone makes a choice, he wants to be a boxer... Binayaran naman siya ng $20million e."
According to Henares, on top of his tax dues for his fight last Sunday, Pacquiao has to settle his tax liability which as of April 2014 is already at P2.73 billion, as Pacquiao only paid P40 million VAT after he talked to the BIR a few months ago.
According to Henares, the amount will again incur 20% interest and 25% surcharge if not paid until April 2015.
If a settlement is reached, Henares said the longest extension for a staggered payment is only for a year. That's why she advised Pacqcuiao to get a loan from the bank if he intends to settle it soon, as banks impose lesser interest than the combined 25% and 20% interest and surcharge leveled by the tax bureau annually.
Meanwhile, Henares reiterated her call to file income tax on time as no extension will be given.
Even if it's just a day late, the 20% interest and 25% surcharge will be imposed, on a pro-rated basis.
Henares is hopeful that with the renewed campaign vs tax cheats, the BIR can reach its goal of collecting P1.456 trillion for 2014.