From 1988 to 1989, I worked as a Tax Accountant (handling Philippine
taxation) for a Law Firm in Makati. Then from 1989 to 1991, I worked
as Chief Accountant and as Tax Associate (handling US, Hong Kong, and
International taxation) for the Hong Kong branch of the Romulo Law
Office. That was more than 20 years ago, and therefore I cannot anymore
even the slightest bit consider myself an expert in taxation. Hence,
these days, any opinion I have on taxation can only be considered as a
layman's opinion, not as an expert's opinion. Pertinently, in my line
of work, whenever I deal with taxation issues I can only do so as a
“generalist,” and I have to work with fellow CPAs and/or with Tax
Lawyers who are the “specialists.”
That said, allow me to share
my layman’s perspective on this current tax issue that confronts our
“Pambansang Kamao.” To simplify matters, I will focus only on his
earnings from the US (and not Macao or wherever else).
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Please consider the following:
* If you work in the Philippines, surely you are aware that taxes are
immediately deducted and withheld from your earnings. Your employer, or
whomever else is the source of your earnings, is "obligated by law" to
immediately withhold your taxes. Therefore whether you like it or not,
whether you are diligent about paying your taxes or not, or whether you
are even aware about it or not, you will definitely still end up paying
your taxes. Meanwhile, Philippine Tax laws, just like most other
Philippine laws, were originally copied from the laws of the United
States. Hence, since Philippine tax laws and US tax laws are similar, I
think it is safe to assume that if you earn income in the US, then your
taxes are immediately withheld, just like in the Philippines.
*
If you live and work in the Philippines, then you will be using and
taking advantage of infrastructure and other resources that are
available to you in the Philippines. The roads you travel on, the
street lamps that light your way, the traffic enforcers that direct your
commute, the police force that ensure your safety, and countless other
resources. Whether you like it or not, you will be using all of these
resources, and they all cost money. This is why you pay taxes to the
Philippine government.
* In the same light, if you work in the
US, then you will be taking advantage of their resources, thus you will
have to pay taxes to the US, not the Philippines.
* If you work
and derive earnings in the US, then you must pay US Tax Rates that are
more than 30%. Hypothetically speaking, if you will also still have to
pay the Philippine government for another layer of taxes that are also
worth more than 30% (please note that I am exaggerating in order to
drive home a point), then your total taxes will add up to as much 65%,
leaving you only 35% for your net take home pay. With a 35% net take
home pay, you will only have enough money left to pay for your food and
shelter so that you can continue working. In other words, you live to
work to live to work, reduced to a robotic existence. In which case,
Filipinos might as well never work in the US (or anywhere else abroad)
anymore. Pertinently, this is why double taxation is not allowed.
(Please note that US tax rates might even be higher than Philippine tax
rates, please see http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2013.)
* Based on all the foregoing premises, I think it is safe to assume
that when Manny fought in the ring and earned his income in the US, he
automatically already paid taxes. There may have been some lapses on
his part when it comes to furnishing the Philippine BIR with copies of
tax returns and related documents that he submitted to the US Internal
Revenue Services or IRS (which is the counterpart of the Philippine
Bureau of Internal Revenue or BIR), but IN PRINCIPLE it is unlikely that
he has actually committed anything worth being punished for. Come to
think of it, since Manny earned much of his boxing income in the US,
then if he indeed committed any form of tax evasion, it is the US
government (specifically he IRS) that would have already and immediately
gone after him. It's really that simple, nothing complicated.
*
Moreover, although he did not anymore have to pay taxes to the
Philippines, the fact of the matter is that he still remitted a great
deal of his "Net-Income-After-Taxes" back to the Philippines -- Paying
the salaries of his very many Filipino employees (who are therefore able
to support their families), purchasing Philippine commodities and
properties, donating to Philippine charities, etc., etc., in other words
significantly contributing to the Philippine economy. Come to think of
it, isn’t it that the one of the primary reasons that our nation is
still able to survive, despite all the corrupt and wealth-grabbing
politicians, is that we have so many Filipinos who, just like Manny,
work and pay taxes abroad, but remit the rest of their earnings to the
Philippines?
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* To be perfectly honest, when
the news first broke out, I could not understand why they were suddenly
going after Manny. It was only after I got to read the two articles
posted here below that I finally understood what the tax drama was all
about. Like I said, I am merely a “generalist,” and thus what I have
written above are merely my “generalist” opinion. To read the opinions
of the “specialists” or the “experts,” I respectfully recommend that you
please click on the following:
(1) “Manny Pacquiao, the BIR, and Taxation's Power to Destroy” by Atty. Mel Sta. Maria
http://www.interaksyon.com/article/75788/mel-sta--maria--manny-pacquiao-the-bir-and-taxations-power-to-destroy
http://www.interaksyon.com/article/75788/mel-sta--maria--manny-pacquiao-the-bir-and-taxations-power-to-destroy
(2) “Pacquiao – Latest Victim of Hold-order Mindset” by Federico D. Pascual Jr.
http://www.philstar.com/opinion/2013/11/28/1261787/pacquiao-latest-victim-hold-order-mindset
http://www.philstar.com/opinion/2013/11/28/1261787/pacquiao-latest-victim-hold-order-mindset
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* FINALLY, they say that they are not harassing Manny. Well, this is what I have to say about that:
-- Have you ever experienced receiving a Meralco bill that indicated
that your electric bill for the current month is greater than your
electric bill for the previous month by as much P1,000? How did you
feel? Were you able to sleep that night? Can you imagine therefore
what it feels like to receive word that you might owe tax charges of as
much as P2.2Billion?
-- Many people say that Manny, or more
specifically Manny’s accountants and lawyers, will eventually be able to
smoothen all this out, because it’s all just a matter of documentation.
I agree. But still, great anxiety and significant grief have already
been caused. Indeed, Mommy Dionisia has already been rattled to the
bones and made ballistically upset – thank God she did not suffer a
heart attack. In other words, the damage has already been done. In
most other circumstances, if someone causes you that same level of grief
and anxiety, you can sue them for damages, right? But in this case,
after the case is finally smoothened out and resolved (which I hope will
indeed eventually happen), after all is said and done, Manny's
persecutors will probably just shrug it off and pretend it didn't
happen. "Kung sobra mang nasaktan at sumama ang loob ni Manny at ng
pamilya niya, then sorry na lang, ganun talaga eh." "Wala lang."
-- Manny has already brought so much honor to the country. Yes there
are other Filipinos who have also brought honor to the country, such as
Lea Salonga, Charice Pempengco, Arnel Pineda, etc., but I think it is
safe to say that they -- perhaps even all of them combined -- pale in
comparison to Manny. Indeed, Jessica Sanchez (who may even be more
famous than the three singers that I have just mentioned) was recently
merely a front act for Manny at Macau. Truth be told, I think that the
only way that a Filipino (who is not the country's president) can
outshine Manny on the world stage is by winning the Nobel Prize.
Seriously.
-- Decades ago, the Philippines was unheard of in many
parts of the world. Now, when we get hit by a super typhoon, the whole
world rushes to our aid, and I think we have gained recognition and
respect worldwide because of people like Manny.
-- Therefore,
considering that there is a good chance that Manny may have actually
already paid all (or at least most of) the taxes that he has to pay,
and considering that he has already brought so much honor to the
country, is it too much to ask that instead of persecuting him, that
they should instead just persistently try to reach out to him and
patiently guide him? After all, they have already been far more patient
with so many other individuals or companies who are the actual and
bigger tax evaders. Any way you look at it, slapping Manny with a
notice for a P2.2Billion tax charge (even if it is merely a potential
tax charge), and freezing some of his assets a day after he has just
brought honor to the country, simply leaves a bad taste in the mouth.
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