Pacquiao’s Bank Accounts Seized in Philippine Tax Row

Manny Pacquiao, the world-champion boxer and a national icon in the Philippines, had his accounts frozen by two banks as authorities seek to collect 2.2 billion pesos ($50.3 million) in unpaid taxes.

The Bureau of Internal Revenue issued a warrant in July to 36 banks to seize Pacquiao’s assets after he failed to prove he paid taxes in the U.S. in 2008 and 2009, Commissioner Kim Henares said yesterday. Twenty-two banks responded to the order, with two saying he had 1.1 million pesos in accounts with them, Henares said.

The order marks the latest step in a long-running dispute between Philippine tax authorities and Pacquiao, a lawmaker representing Sarangani province who has won world boxing championships in eight weight classes. Pacquiao’s victory over Brandon Rios on Nov. 24 brought emotional relief to a nation devastated by Super Typhoon Haiyan, which killed more than 5,000 people earlier this month.

“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,” 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.

Instead of an IRS document, Pacquiao’s promoter, Top Rank Inc., sent a letter saying it paid U.S. taxes on the boxer’s behalf, the tax commissioner said.

Withheld Taxes

Pacquiao told ABS-CBN News Channel yesterday that he borrowed more than 1 million pesos so he can help victims of Haiyan. He promised to visit the affected area after his fight with Rios to bring aid. The boxer asked that the garnishment be lifted, his lawyer Tranquil Salvador said on GMA News TV.

Top Rank included documents in its letter to the tax bureau to prove it withheld taxes for Pacquiao, Salvador said in the television interview.

Top Rank had asked for certification from the IRS three months ago and that takes time, Top Rank Chief Executive Officer Bob Arum said in a phone interview with ABS-CBN today. Henares should have asked the IRS herself, he said.

Every time a payment is made to Pacquiao, 30 percent of that is deducted and goes to the IRS, Arum said. Top Rank had probably made 15 to 20 wired payments involving Pacquiao in the past three years to the IRS, which then sends wire documents confirming receipt of the money, he said.

“One thing she should never have done is freeze this man’s bank accounts,” Arum said of Henares.

Authorities are also investigating Pacquiao’s 2010 tax payment, Henares said, without giving details. Pacquiao paid more than 100 million pesos in taxes in 2008 and about 7 million pesos in 2009, Henares said last year.

The BIR is seeking to boost tax collection by 19 percent this year to 1.25 trillion pesos. While revenue rose 16 percent in the first nine months, collection fell short of the 931 billion pesos targeted, according to government data.

Before it's here, it's on the Bloomberg Terminal.