On one hand, the issue surrounding the tax evasion case the Philippines’ Bureau of Internal Revenue (BIR) is raising against boxing champ Manny Pacquiao is pretty straightforward. The BIR had given Pacquiao two years to submit the documents required of him specific among them are original tax returns from the United States’s Internal Revenue Service (IRS). Top Rank Inc, Pacquiao’s promoter and the company that withheld taxes on income he had earned in his fights and other business activities in the US, had reportedly requested those documents from the IRS only three months ago as of this writing. Instead, Top Rank had sent a letter to the BIR certifying that it had already paid the IRS those withheld funds on behalf of Pacquiao.
“We’ve actually given him leeway and we back off every time he has a fight because we don’t want to be blamed if he loses,” [BIR Commissioner Kim] Henares said. Authorities gave Pacquiao two years to produce a tax return from the U.S. Internal Revenue Service, Henares said. The 2.2 billion pesos the BIR is seeking includes interest and surcharges, according to Henares.
The rules are the rules, the BIR had, as it seems, given enough time to produce the documents, and, as reported, Top Rank Inc had initiated the securing of these documents from the IRS only three months ago. One wonders what Pacquiao’s accountants had been doing all this time. It sounds like they dropped the ball on this one.
Then, on the other hand, questions have been raised as to whether Pacquiao is being unfairly singled out by the BIR. It is common knowledge that tax evasion is as institutionalised a crime in the Philippines as any other big-time racketeering and money laundering operation perpetrated by Filipino politicians and businessmen alike. Back in 2006, the Philippine government had “lost” a tax evasion case against business taipan Lucio Tan. The case involved allegations that Tan’s Fortune Tobacco Corporation had evaded paying Php25 billion in taxes over the years 1990 through 1993. The case, at the time, was dubbed the “Mother of all tax cases” due to the sheer size of the loot at stake.
Tan’s success in court is likely owed to the top-notch skill of his legal team and the resources at their disposal. By many accounts, Tan has had decades of experience building an awesome tax evasion infrastructure around his business interests consisting of dummy corporations and setting up complex networks of business links among these that could mask illegal activity.
Pacquiao, on the other hand, is a sitting duck and a naive amateur when it comes to big-time Pinoy-style money management. His fans, no matter how many of them there are, cannot help him. The BIR, under pressure to meet collection targets, is wise to single him out. Compared to Fortune Tobacco Inc, Pacquiao Inc’s lack of experience in business management and its readily traceable money trail makes it easy pickin’ for the BIR, promising the embattled agency big returns for relatively little risk of failure. Why climb a tree to pick the bayabas when you’ve already spotted a fat ripe one hanging by a thread that you can simply sit underneath and wait to fall into your gaping mouth? That’s Risk Management 101.
Just the same, the question of how hard the BIR really tried to nail Tan to the wall over the years on his tax liabilities is still being questioned. In 2012 a House inquiry led by Gabriela Party list Rep. Emmi A. de Jesus filed a resolution to do just that, alleging that the BIR’s response to the Tan cases — up to the present — were all consistently lacking in enthusiasm…
De Jesus said Danilo Pacana, a former internal audit manager of Allied Bank, filed tax dodging cases against the Tan-owned companies on December 6, 2011. The congresswoman said Pacana described how these companies failed to pay their tax obligations estimated at more than P1.2 trillion, inclusive of the 25 percent penalty and 20 percent interest charges for Fortune Tobacco alone. The whistleblower claimed that Fortune Tobacco and Asia Brewery used 27 dummy marketing companies to grossly under-declare their actual sales, thereby reducing their taxes.
De Jesus said Pacana, as early as 1987, filed tax evasion cases against Allied Bank, which was assessed to have outstanding obligations of P213 million. But then Commissioner Beethoven Rualo dismissed the complaint “reportedly under highly questionable circumstances,” the House resolution read.
Citing Pacana, De Jesus said the whistleblower in December last year filed his complaints with Henares, who allegedly promised to look into the Tan companies.
The congresswoman said Pacana complained that follow-ups with Henares on April 12, June 15 and August 29 showed his complaint was “not acted upon.”
De Jesus said a separate complaint filed in 2010 by Elpidio Que, a former regional sales manager of a Tan company, also bore no fruit. Que had exposed the “atrocious tax evasion schemes” meant to cheat the government “hundreds of billions of pesos.”
De Jesus said the Department of Justice on June 1, 2011 endorsed Que’s complaint to Henares, but “the said endorsement was not acted upon until the present.”
The silver lining in all this is that Pacquiao is a member of Congress. What is he in power for? That is the key question that begs to be asked here. Pacquiao has the power, as a House Representative (a legislator to emphasize that point), to initiate measures to reform the system that allows astute businessmen like Tan to fly way above the clutches of Philippine Law. This should be the sort of publicity campaign he should be mounting whenever he faces the media. Instead, however, Pacquiao — as with countless legislators before him — is squandering an opportunity to make a lasting difference by focusing on the wrong arguments.
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