Macau’s Tax-Free Status Means About 20% Of Pacquiao’s Prize Money From Algieri Bout Would Go To Philippine Taxman

Manny Pacquiao's foe is back. No, it's not Floyd Mayweather Jr with whom Pacquiao is exchanging jabs on Instagram. It's the Philippine taxman who is again running after the Filipino champ's earnings.

The richest congressman in the Philippines, who still has a running dispute with the country's Bureau of Internal Revenue (BIR), must pay to the agency about 20 percent of the income that Pacquiao earned from his Nov 22 bout with American boxer Chris Algieri.

An official of the BIR pointed out that because Macau, the venue of the bout, is tax-free, then the tax savings that Pacquiao enjoyed from his guaranteed purse of $25 million plus pay-per-view share would be taxed. The unnamed official estimated the amount to about 200 million pesos.

At the current exchange rate of $1: P44.74, the $25 million he earned in Macau is equivalent to about P1.1 billion.

The tax-free status of Macau is because it is a special administrative region of China, which gives businesses located in the region that was once a Portugal colony preferential treatment when it comes to taxes to encourage more foreign businesses to invest there.

If Pacquiao fought Algieri in Las Vegas, then the tax due that the boxer would have to pay the Philippine government would be lower since the US Internal Revenue Service automatically deducts its share from the earnings made by Pacquiao from a boxing match held in the US. It is part of the bilateral tax agreement between the Philippines and the US.

However, the BIR could not charge Pacquiao value-added tax for his earnings from the Algieri bout since the VAT covers only goods and services sold in the Philippines. For his endorsements from 14 commercial products that Pacquiao made from 2008 to 2009, the boxer paid over P32 million VAT.

Here's an update on his ongoing tax dispute with the BIR, which says that Pacquiao's tax arrears had bloated to P2.6 billion from the previous P1.1 billion, pre-Algieri bout.

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