Pacquiao's new winnings may pay down US tax debt, not BIR

By Rommel Conclara, ABS-CBN North America Bureau

April 14, 2014

DALY CITY, Calif. – Manny Pacquiao’s guaranteed pay from his fight against Timothy Bradley is $20 million.

But a hefty chunk of this money could be used to pay his taxes owed to the Philippine Bureau of Internal Revenue and the IRS.

According to BIR Commissioner Kim Henares, Pacquiao owes more than $59 million in tax deficiencies in the Philippines which includes previous back taxes from his fights from 2008 to 2009.

Pacquiao is facing a similar problem with the IRS which is reportedly seeking $18 million from the boxing champ.

Tax expert Daniel Raval says that Pacquiao’s new winnings could help him in paying his taxes particularly in the U.S.

“It’s not going to hurt him in any taxes owed to the BIR in the Philippines mainly because there is no double tax — meaning from the $20 million that he’s earning, 30 percent is withheld from his winnings by the United States and by the IRS and there’s no double tax. So it’s not going to hurt him but it’s going to help him pay some taxes due here in the States,” Raval said.

Raval says the BIR may instead focus on the how much Pacquiao will earn from other projects in the Philippines.

“Mostly, the issue might be how much you earned in the Philippines to commercials, to endorsements,” he said. “So if he earned that money in the Philippines then he will owe it to the Philippine government, of course. Make sure to pay enough money, enough taxes to pay it off now and then you worry about payments and settle with the IRS and the BIR to the past amounts.”

Raval tells the boxing champ to solve his tax problems sooner than later.

“At least in the future there won’t be a problem with taxes because your books are okay. Your deductions are okay. Your income, you reported it correctly. So it’s always back to basics,” said Raval.