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BIR: Taxes from Pacquiao to boost '09 collections

By Zen Hernandez, ABS-CBN News | 11/21/2009 10:17 PM

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MANILA - Manny Pacquiao makes millions of dollars every time he laces up his gloves and goes to the ring. After all, he is acknowledged as the world's best pound-for-pound boxer.

His win against Ricky Hatton in May this year earned him over $25 million, while he got $13 million from his latest fight with Miguel Cotto, excluding an expected windfall in his share of pay-per-view (PPV) revenues.

On top of these, Pacquiao signed several big endorsement contracts this year.

Pacquiao's earnings are seen to help the Bureau of Internal Revenue (BIR) in its tax collection efforts. The BIR imposes a 32% tax on individuals with annual net incomes of at least P500,000, which include Pacquiao.

"'Yong kanyang mga endorsements, 'yong share dun sa pay-per-view, malaki-laki rin daw iyon, pati din siguro sa mga other activities like movies...Well, we anticipate na dapat mas malaki, ang balita namin mas malaki ang kinita nya for this year," BIR Commissioner Joel Tan-Torres said.

("His endorsements, his share in pay-per-view revenues, those are quite big. There's also his earnings from movies. So we're expecting higher taxes from him, we heard that Pacquiao earned more this year.") 

But even with Pacquiao's tax contribution, the BIR admitted that the government will be unable to reach its annual revenue target of P798 billion.

Lower tax collection and higher spending have caused the government to breach its full-year budget deficit target as of end-October. Earlier, the government is looking at a P250-billion fiscal shortfall for 2009.

Still, the government stressed that it will try to keep the budget gap at P280 billion by year-end through its continued efforts at tax collection and privatization of state-owned assets.

Expenses, investments?

With Pacquiao's $25-million (P1.175 billion) earnings from his fight against Hatton, his income tax is about P352 million. And that is for one fight alone.
 
But Jeng Gacal, Pacquiao's lawyer, explained that Pacquiao does not get his full earnings, so he should not be charged with very high taxes.

For one, Gacal said that Pacquiao has to pay for the expenses and salaries of Team Pacquiao, who goes with him during his fights.

"Kung anong nababasa ninyo sa dyaryo, hindi iyon ang income ni Manny. Una, kailangan niya magbayad ng tax sa America so less 30% sa America. And then he has to pay his coach, na alam naman nating 10%, so that's already 40%. May iba pang gastos sa mga tao," Gacal said.

("Whatever you get to read in the newspapers, that's not Manny's real income. First, he has to pay taxes in the United States, so that's less 30% already. And then he has to pay his coach, that we know is 10%. So that's already 40%. And then Pacquiao has other expenses.")

Aside from higher expenses, Pacquiao earlier mentioned that his winnings from his fight with Cotto will be used on several investments.

"Nagpagawa ako ng building sa Manila, iyong MP Tower...and then, bumibili ako ng bahay, at nagpapagawa din ng mga building din sa GenSan at sa iba't ibang lugar. Of course, nag-iinvest kami...Sine-save namin para sa kinabukasan ng mga anak namin," Pacquiao said in a recent interview with ABS-CBN's Dyan Castillejo.

("We had the MP Tower built in Manila. And then we bought a house, and had other buildings constructed in General Santos and in many other places. Of course, we invest and save for our children's future.