06 Jan Manny Pacquiao: Knocked Out by Taxes?
As of 2020, World boxing superstar Manny Pacquiao has a net worth of $220 million – making him the highest-paid athlete from sports pay-per-views, live gates, merchandises, acting gigs, and sponsorships. With over 100 properties such as buildings, houses, and land both in the US and the Philippines. It is estimated that his net worth will get even more significant. But with more money, it could mean that the IRS and BIR or bureau of internal revenue in the Philippines will be watching him even more diligently. Back in 2019, while Manny Pacquiao was knocking out opponents, he almost got knocked out because of his taxes.
Boxing Titles vs. Tax Troubles
Since his debut into the professional boxing world in 1995 when he was only 16, Manny Pacquiao has become a well-known name. He has become the first boxer to win twelve boxing titles in eight weight categories. He was defeating world champions such as — Adrien Broner, Chatchai Sasakul, Lehlohonolo Ledwaba, Jorge Eliécer Julio, Marco Antonio Barrera, Érik Morales, Óscar Larios, Jorge Solís, Joshua Clottey, Antonio Margarito, and Keith Thurman.
After an abrupt drop as one of the Philippines ’ top 10% taxpayers in 2009, the BIR started requesting supporting documents. When he was audited for his 2008 to 2009 income tax return, he could not submit documents to help the sudden taxable income drop. This prompted the BIR to subpoena him. He later submitted an affidavit declaring his US income tax and payment, but still, there were no supporting documents. By this time, he had tax obligations amounting to $16 million. Manny had only declared his income in the Philippines and not what he had earned in the US. These included his fights against Juan Manuel Marquez, David Diaz, Oscar de la Hoya, Ricky Hatton, and Miguel Cotto.
Entering the Ring with the Court of Tax Appeals
Manny Pacquiao then appealed to the CTA or Court of Tax Appeals, explaining that he had submitted what the BIR asked for and that any other taxes he had paid the IRS since the fights were held in the US, not in the Philippines.
In July of 2018, the Court of Tax Appeals lifted the $62 million tax sanction where he was required to pay millions in tax deficiencies. These tax deficiencies in income and value-added taxes totaled that amount after penalties and surcharges. The Court of Tax Appeals also lifted the warrants for distraint and ruled that the surety bond, amounting to $100 million, be dispensed.
The CTA cited that for the BIR to launch an investigation, they should have established prima facie evidence of fraud. The BIR’s only evidence was considered inadmissible because it was based on hearsay and news articles. The CTA found that the BIR had failed in complying with requirements under their laws and issuances.
Simultaneously, he was having problems with the CTA and BIR in the Philippines, and the IRS was also claiming he owed them $18 million more from 2006 – 2010. There is a treaty that prevents double taxation, but could Manny Pacquiao’s tax problems be finally over? Or will we be accepting another match but this time with his taxes?
If you have any questions on other kinds of support you can get when it comes to your taxes, we invite you to contact the Golden Tax Relief team.