Pacquiao, BIR in out-of-court negotiation

Manny Pacquiao INQUIRER FILE PHOTO

MANILA, Philippines—The Bureau of Internal Revenue (BIR) and the camp of boxing champ Manny Pacquiao have agreed to pursue an out-of-court negotiation over the P2.2-billion tax case of the boxer.

“Both parties agreed to explore further negotiations over the matter,” Claro Ortiz, the BIR lawyer handling the tax case of Pacquiao, told the Inquirer.

Ortiz said the decision of both camps to negotiate was relayed on Thursday to the Court of Tax Appeals (CTA), which called on the two parties for a hearing.

Gag order

The CTA gathered the two parties supposedly to conduct a hearing on a motion previously filed by Pacquiao to contest the tax liability assessment issued by the BIR.

But Ortiz said both camps informed the CTA that they would pursue negotiations.

In response, the CTA issued a gag order, thus preventing both camps to comment publicly about the case while they explore ways to negotiate.

The Tax Code allows compromise settlements on tax cases under certain circumstances.

The BIR and Pacquiao’s camp will see whether his tax case would fit any of the Tax Code’s provisions on compromise settlement.

Earlier this year, the BIR slapped Pacquiao with a P2.2-billion tax deficiency assessment.

Penalties

The amount covers allegedly unpaid taxes plus penalties for incomes he derived in 2008 and 2009. Incomes covered winnings from his fights, earnings from pay-per-view cable services that aired the fights, and earnings from endorsements.

Penalties accounted for about half of the P2.2-billion tax liability assessment.

The Tax Code states that unpaid tax liabilities may be slapped a maximum 50-percent surcharge and an annual interest of 20 percent.

Following his alleged failure to respond to the BIR’s tax assessment within allowable time, the BIR in July issued a warrant of distraint and levy on the two bank accounts of Pacquiao worth P1.1 million.

Just two accounts found

The move was an attempt to get hold of the money as partial payment for his alleged tax liabilities.

The BIR was looking for other bank accounts of Pacquiao, but had so far found only two.

Pacquiao then immediately filed a motion with the CTA to contest the tax assessment and to prevent the BIR from getting hold of his money.

The CTA last month issued a status quo order, which called on both parties not to do anything with the money in the two bank accounts.

The order meant that the BIR is not allowed take the money, and that Pacquiao is not allowed to withdraw from the two bank accounts.

On the two camps’ meeting at the CTA on Thursday, Ortiz said, the court decided to maintain the status quo order.

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