Mr. Energy’s tax advice

Benny Gonzalez, 70, likes to call himself Mr. Energy and lives by his own self-styled dictum “age defy or petrify.” He resides in Sta. Rosa, Laguna, with his wife of over 50 years, eats healthy, plays badminton for three hours at least three days a week, avoids straying out of his provincial fresh-air environment and wears an undyed pony tail.

Gonzalez says he has done financial consultancy work for entities like Megaworld and Asian Development Bank. He’s a CPA, a double degree graduate from La Salle and a holder of a Master’s degree in business management from the pioneer Asian Institute of Management class in Padre Faura before the school transferred to Makati.

Gonzalez married early at 20 just as he entered college and by the time he graduated, had three children. Today, four of his children work abroad and three live here. The age range of his children is 35 to 49. Before turning 60, Gonzalez swore off smoking and drinking which were his minor vices. He changed his lifestyle overnight, cold-turkey style, and has never looked back.

“I’ve got a bet with my Tio Delfin (Gonzalez) who’s turning 100 this year that I’ll outlive him,” Gonzalez chuckles. “My Tio Pepe died at 107. I’m hoping to live longer. I’ve got good genes from both my father and mother. My dad died at 84 but he was a smoker and drinker until the end. Genes are like your capital investment. If you don’t take care of your investment, you won’t last long. Now, I don’t eat meat. I wake up early and eat only twice a day, breakfast and dinner before 6 p.m. I used to weigh 194 pounds. Today, I’m down to 150 and feeling great.”

Gonzalez keeps busy by writing essays on anything under the sun. He has an opinion on practically everything from politics to healthy living to sports. Gonzalez says he sends some of his pieces to newspaper columnists and he’s surprised that several of his more poignant comments get published without ascription.

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A few days ago, Gonzalez sought me out to discuss an interesting proposition. He got in touch with me through my brother Ramon who was his classmate at La Salle. Gonzalez said there is a provision (Article 17, Paragraph 3) in a tax treaty binding the Philippine and US governments that “income derived from activities performed in a contracting state by public entertainers or athletes shall be exempt from tax in that contracting state if the visit to that state is substantially supported or sponsored by the other contracting state and the public entertainer or athlete is certified as qualified under this provision by the competent authority of the sending state.”

Gonzalez clarified that this special provision isn’t a standard provision in tax treaties. “Our tax treaty with China does not allow this flexibility,” said Gonzalez who claims to have done extensive research on the issue. His assumption is Manny Pacquiao qualifies for this tax exemption. Of course, it must be proved that Pacquiao’s forays in US rings are “substantially supported or sponsored” by the Philippines.

Assuming Pacquiao qualifies under this provision, Gonzalez said the ring icon and the BIR could arrive at a “mutually beneficial” formula in a win-win solution. “My point is for the BIR to offer him a break from local taxes that would be less than what he would pay in the US or elsewhere that would be impossible to refuse,” he said. “With an arrangement like that, Pacquiao will gladly cooperate and the Philippine government can already request the US to place all his bouts there under his special dispensation.”

Gonzalez said from estimates based on media reports, Pacquiao has paid taxes to the IRS for earnings of about $83.5 Million from 2006 to 2012 in the amount of $25 Million or P1.027 Billion. Or at least that is what Pacquiao should have paid through Top Rank equivalent to 30% of his gross take. Gonzalez’ contention is the money could’ve gone to the Philippine government instead.

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Gonzalez said for the coming Timothy Bradley fight, Pacquiao will earn $18 Million and under the US tax rate of 39.6%, he will pay about $7 Million in taxes or P315 Million. “On a larger scale for the long run based on earnings of $100 Million over the next four bouts, Pacquiao will be paying taxes to the US in the amount equivalent to about $1.78 Billion where the Filipino will not benefit anything unless the government does what I suggest,” said Gonzalez. The amount does not include pay-per-view receipts which may also be subject to the tax treaty provision.

“As financial adviser, I would suggest invoking the special provision of the US Philippine Tax Treaty then a deal could be made with the BIR that in lieu of the taxes to be paid here instead of in the US, the windfall will be split between the government and Pacquiao,” he said. “On a 50-50 split, this could bring in P890 Million to the Philippine government from his next four fights and a savings of P890 Million for Pacquiao which goes straight into his bank account. Of course, as financial advisor and instigator of this unsolicited advice, I think I deserve to earn a fee because after all, this is what I do for a living, it puts food on the table for my family.”

Gonzalez said he’s willing to meet with anyone interested to pursue this win-win solution or to explore his theories on longevity. His contact details are cellphone numbers +63917-3450240 and +63906-5770084 and email [email protected].