Arum comes to Pacman’s rescue; BIR open to compromise

MANILA, Philippines - Manny Pacquiao’s promoter Bob Arum said he expects certified US tax paperwork for the Philippine boxing hero to be received by authorities in his homeland “very soon” after they froze the fighter’s assets.

Arum said allegations of P2.2 billion ($50.2 million) in unpaid taxes from US bouts in 2008 and 2009 are false and that his Top Rank agency made certain the proper money was paid to US authorities just to avoid such problems.

“Filipino authorities confirmed that Manny is not required to pay double tax,” Arum said in a statement yesterday.

“If Manny paid US taxes for fights and endorsements that occurred on US soil, he is not required to pay double taxes in the Philippines,” he said.

Pacquiao, 34, said the Bureau of Internal Revenue (BIR) had rejected the documentation he provided to show payments had already been made to the US Internal Revenue Service (IRS), a claim Arum supported.

BIR commissioner Kim Henares said they are open to a compromise deal with Pacquiao if he could present the documentation.

Henares said the BIR under the law is allowed to compromise the payment of any tax when there is reasonable doubt as to the validity of the claim against the taxpayer or the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.

Arum maintained that in each of Pacquiao’s fights in the US, including those in 2008 and 2009, Top Rank withheld 30 percent of the Filipino boxer’s purses and paid those monies directly to the Internal Revenue Service via Electronic Funds Transfer (EFT).

“Top Rank has deposit confirmations for each payment. Top Rank has done the same for all US endorsements it has facilitated on Manny’s behalf,” Arum said.

But Arum said the BIR wanted certified paperwork of those transactions from the IRS rather than deposit confirmations.

“Top Rank submitted copies of the EFT deposit acknowledgements to the Bureau of Internal Revenue as proof of payment. The BIR received the documents but directed Manny to obtain ‘certified’ documents directly from the IRS itself.

“Obtaining certified copies of documents from the IRS takes time. Manny made the formal request to the IRS and we have every expectation that the necessary documents will be furnished to the BIR very soon,” he said.

‘I am not hiding anything’

In the meantime, Pacquiao’s bank accounts remain frozen and he remains unable to make good on a pledge he made after taking a unanimous decision Saturday in Macau over American Brandon Rios to help support victims of Super Typhoon Yolanda.

“I am not a criminal or a thief. I am not hiding anything,” Pacquiao said.

“I have already paid my taxes in America. Had I not paid the correct taxes, they (US authorities) would have come after me, and I would not have been able to travel there,” he said.

Pacquiao, one of the highest paid athletes in the world, and his wife Jinkee have filed an urgent motion before the Court of Tax Appeals to lift the warrants of garnishment in a bid to stop the BIR from freezing the bank accounts.

The BIR assessed the Pacquiao couple of having deficiency income tax for the years 2008 and 2009 in the total amount of P2,229,020,905.50 (inclusive of 50 percent surcharge and 20 percent  per year interest).

The alleged tax deficiency has increased to P3.2-billion due to additional penalties imposed by the BIR.

Pacquiao’s lawyers argued the amount was “incredibly high.”

Pacquiao himself noted the assessed penalty was more than his total net worth.

‘Where’s the proof?’

Under the Tax Code, a compromise payment of at least 40 percent of basic tax assessed may be allowed when reasonable doubt as to the validity of the assessment against the taxpayer exists.

In cases where the taxpayer is suffering from a net worth deficit or has been declared bankrupt, a minimum compromise rate equivalent to 10 percent of the basic assessed tax can be assessed.

Where the basic tax involved exceeds P1 million or where the settlement offered is less than the prescribed minimum rates, the compromise shall be subject to the approval of the BIR’s evaluation board.

Henares said no offer of compromise would be entertained unless the taxpayer waives in writing his or her privilege of the secrecy of bank deposits.

Such waiver shall constitute the authority of the BIR commissioner to inquire into the bank deposits of the taxpayer.

Compromise of tax liabilities is discretionary upon the BIR.

Henares said Pacquiao has yet to prove he paid taxes in 2008 and 2009.

She explained all Filipino taxpayers are under obligation to report to the BIR all their earnings and submit documents that would prove claims of tax payments.

“What he submitted was a mere scrap of paper. That is self-serving. What he can do is go to the IRS, ask IRS to certify this copy as a true copy. We have been waiting for that for two to three years,” she said.

Even while a taxpayer has paid income tax to the foreign country, he or she may still have a remaining tax liability, Henares maintained.

“That’s why it’s important for him to submit the required documents so we know if he paid the right amount of taxes,” Henares said.

Arum, on the other hand, said in an interview on ANC yesterday that Henares should have asked the IRS for the document herself.

“My question is why, this lady, as the head of the tax bureau in the Philippines, didn’t ask her counterpart in the United States for such a certificate?” Arum questioned. “She put the burden on Manny.”

“Manny requested the certificate from the IRS, and I am sure the certificate will be coming in the next week or so, but it’s not Manny’s fault. It’s her (Henares) fault,” Arum stressed.

Arum said the governments of the US and the Philippines should have corresponded with each other to get the certificate, instead of putting the burden on Pacquiao to get the certificate from the US, of which he is not even a citizen.

Set an example

Malacañang defended the BIR and called on Pacquiao to set a good example.

“Actions taken by the BIR have adhered to what the law requires. He has been given ample opportunity to comply, and he will continue to be treated fairly,” Presidential Communications Operations Office Secretary Herminio Coloma Jr. said yesterday.

“As a public official, it will be well for him to demonstrate that he, too, is a law-abiding citizen,” Coloma said.

Coloma said Pacquiao was not being singled out and that he would have to face the tax evasion case filed against him.

He said “harassment is not in our agenda” and “citizens may avail themselves of appropriate legal remedies.”

Despite the tax issue, the Senate approved yesterday a resolution commending Pacquiao for his recent victory against Brandon Rios in Macau.

Senators Sonny Angara, Grace Poe, Lito Lapid, JV Ejercito, Nancy Binay and Koko Pimentel filed their respective resolutions commending Pacquiao on his victory.

Angara expressed hope that the BIR and Pacquiao would come up with an arrangement to solve the tax issue.

“We do not want to blow this out of proportion and allow the international media to further exacerbate it,” Angara said.

“Pacquiao is without question a national treasure and a hero. For the good of the nation, may this controversy be immediately resolved amicably,” he added.

San Juan Rep. Ronaldo Zamora, for his part, advised his colleague lawmaker from Sarangani province to get the services of a good accountant and a good lawyer to get him out of his tax woes. – With Christina Mendez, Paolo Romero, Ramil Bajo