MANILA, Philippines - World boxing icon and Sarangani Rep. Manny Pacquiao and his wife, Vice Gov. Jinkee, have appealed the tax fraud case filed by the Bureau of Internal Revenue (BIR) against them for alleged tax deficiencies in 2008 and 2009 amounting to P2.2 billion.
Pacquiao filed a petition through his lawyers against BIR commissioner Kim Henares before the Court of Tax Appeals in Quezon City last Thursday.
In the petition, a copy of which was obtained by The STAR, Pacquiao said he wants to stop the BIR from collecting the P2.2 billion in supposed tax deficiencies.
Pacquiao called on the Court of Tax Appeals to declare the BIR’s formal letter or demand and final assessment notices “null and void.”
The bureau had placed the Pacquiao couple under a fraud investigation as early as 2010 in line with its Run After Tax Evaders (RATE) program.
But Pacquiao’s lawyers disputed the BIR’s allegations, stressing that Philippine laws guarantee the petitioners’ protection against double taxation.
Pacquiao’s camp also wants to cancel the assessments for deficiency in income tax for 2008 and 2009 in the aggregate amount of P2,229,020,905.50 for having been issued without factual and legal basis.
Technical issues were also raised by petitioners regarding the manner by which the demand letters were sent.
“In sum, the present dispute centers on an attempt on the part of the respondent to collect taxes on petitioner’s US-sourced income and the refusal of the petitioner to be taxed twice, by both the US and Philippine governments, on the same income,” the petition read.
“The issuance of the deficiency income tax assessment on petitioner’s US-sourced income is in direct contradiction to respondent’s previous pronouncements on the matter,” the petition said.
Pacquiao’s camp quoted Henares’ earlier statement that “a Filipino citizen is taxed on his global income.”
His lawyers said this runs contrary to another pronouncement of Henares that the BIR is going after Pacquiao for his Philippine-sourced income.
The lawyers further argued that Pacquiao’s income from Philippine sources is not in dispute as the gross income from local endorsements based on findings of the BIR’s National Investigation Division had already been admitted by petitioners.
“Insofar as the petitioners’ Philippine income tax liabilities are concerned, respondent should have considered this case closed at the administrative level,” the petition said.
Pacquiao contradicted Henares who “insists on collecting Philippine income tax” against him in connection with his five boxing matches held in Las Vegas, Nevada.
The lawyers said Pacquiao “already paid income tax in the US totaling to $8,414,531 (or approximately P395,500,000).
Pacquiao’s legal team also argued that Henares’ stance is “inconsistent” with the provisions of the Philippines-US Tax Treaty, specifically Article 17 where it is imputed that Pacquiao’s income from boxing matches held in the US is “taxable in the United States.”
Pacquiao hired topnotch lawyers from the Romulo, Mabanta, Buenaventura, Sayoc and De los Angeles to defend his tax fraud case.
In June 2012, the BIR initially demanded that the Pacquiao couple pay a total of P2,200,310,745.23 for taxable years 2008 and 2009.
The same issue became the subject of a formal demand letter dated May 2, 2013 issued by the BIR.
The Pacquiao camp received last July 2 a copy of the final decision on the disputed assessment.
Pacquiao is being charged for P762,515,263.48 in income tax with value added tax (VAT) amounting to P4,374,267.14 for 2008.
For 2009, the BIR is collecting from Pacquiao P1,406,715,144.03 with P26,706,070.58 VAT.
“Petitioners have not decided to further contest the 2008 and 2009 VAT assessments and are currently arranging payment in the amount of P32,196,534.42,” the petition said.
Pacquiao’s lawyers argued that the respondent has ignored the proof of taxes paid by the petitioners to the US government in 2009.
In 2008, Pacquiao had three fights in the US with Juan Manuel Marquez, David Diaz and Oscar dela Hoya.
In 2009, Pacquiao fought Ricky Hatton and Miguel Cotto.
Pacquiao’s income from local endorsements in the Philippines was pegged at P109.5 million in 2009, and P13.6 million in 2008.
Records showed that Top Rank, Inc. paid the petitioner a total of $12.9 million for 2008 and $14.9 million for 2009.
In 2008, Pacquiao paid income tax of P4.505 million to the Philippine government for his local endorsements and P120.747 million to the US government for his US-sourced income.