Manny Pacquiao and Taxes
Doing what we do, I still find it interesting to note that King Boxer Manny Pacquiao cannot be in the United States for more than 183 days in a year for pre-fight promotions, his training and the actual slugfest at the MGM in Las Vegas.
The newspapers were not saying that directly, except that our favorite boxer they say has to train either in Canada or the Bahamas Island in the Caribbean. He is reaching that mark of legal presence in the United States during all those years he has been coming into the country and once he met what is called, “the Substantial Presence Test,” he would be taxed in the United States just like a U.S. Citizen or a Tax Resident.
The Internal Revenue Service will collect taxes from him by the millions that could help stimulate the U.S. economy when properly disbursed by our leaders. That tax law is clear and applies to him and it cannot be out-boxed like the Mexican Champions. The handlers of his finances must know what they are doing, and like any celebrity with too much money at stake to be taken by Uncle Sam, he should get the best Tax Advisors in his U.S. endeavors.
Maybe the fight should be held in the Philippines now for tax planning reasons. It will be good for our country. I also really wonder how much taxes he has already paid to the Philippine government, which should be at least one third of his taxable income. Help me figure it out if I am not writing silly.
He should be one of the highest taxpayers in our country, if not the highest. That would be a very interesting if we could dig it for the news.
Two (2) things I know, he bought a home in Los Angeles and he is not yet my client. But what if he were my client, need I tell you?
I believe he is an honest man and I admire his Philanthropic work in Los Angeles giving away Turkey that may be tax-deductible. Someone also close to him stole his money from the bank in his absence that may also be tax-deductible. The worst punch that could hit him in his success is an IRS or BIR audit. He should have the best Tax Advisors around him.
My wish is he will not be taxed too much by Uncle Sam but by the Philippine government that needs his tax money more than the United States in its economy. But who knows, boxers are not immune from IRS tax “punches” and it will be a distinct honor to defend him, just in case Uncle Sam’s tax claws ever reach him. His handlers should know better, or better yet, our icon Manny Pacquiao should know the tax law himself that he should deal with on two (2) sides of the globe.
In case he is taxed in the United States on his income under the “substantial presence test” rule, the income taxes he paid in the Philippines will be credited from what he owed in the United States. The tax treaty the Philippines have with the United States may be applicable to him.
One final advice to my favorite “angular box” double slugger, (the best form I have seen in boxing), take care of your taxes well “kabayan” or it will punch you. God bless you again in your next fight, hopefully it will be U.S. income tax free.
Manny Pacquiao. Photo by Benny Uy.
Angel Y. Dayan, EA, CPA, ABA, ATA is a U.S. Tax Consultant and Federally Authorized Tax Practitioner admitted to practice in California and in 50 States. He is a Certified Public Accountant in Texas and in the Philippines. He completed a Masters Course in Tax Representation. He is a Fellow in Tax Practice and completed Advanced Studies in Tax Practice Procedures at the American Academy of Tax Practice. His office is located at 150 East Olive Avenue, Ste.-116 Burbank, California. He meets clients daily for appointment and he could be reached at (213)-365-1040. He also maintains an office in the Philippines for Philippine clients.
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Nice article! As a CPA myself dealing on U.S. and Philippine taxes, I agree that Manny Pacquiao would easily qualify as a U.S. resident under the “substantial presence test”. Whilst, because of a special provision in Philippine tax law, his purses from his fights are not taxable in the Philippines (but his share in HBO buys are not), they are as we know, taxable in the U.S. Hence, if he would be treated as resident in the U.S. for tax purposes and his income from his Philippine “ventures” would have to be taxed in the U.S. as well, it would be Uncle Sam benefiting more from this prized fighter from the Orient instead of the BIR. And yes – Manny should make sure that he chooses capable tax accountants to handle these matters.