‘Only donor’s tax for Diaz’s rewards’
OLYMPICS gold medalist Hidilyn Diaz and other national athletes will not pay income taxes on pledges from private sector, the Bureau of Internal Revenue (BIR) said on Monday. During a hearing, House Committee on Ways and Means Chairman Joey Sarte Salceda sought a clarification on the tax treatment of pledges to Diaz from the private sector, now amounting to at least P72.5 million.
The matter has drawn controversy because the law only deems taxexempt the financial rewards granted by law from the government coffers.
Donor’s tax
BIR, represented by Assistant Commissioner Larry Barcelo, said the bureau will only subject the donor to donor’s taxes, and that the pledges will not be part of the taxable income of Diaz or the other Olympians.
Under the National Internal Revenue Code, the tax for each calendar year shall be six percent computed on the basis of the total gifts in excess of P250,000 exempt gift made during the calendar year. The donor’s tax is payable by the donor.
“I say this because the tax code is not very clear as to what qualifies as ‘bequests.’ I am not so sure what basis BIR will use, because the tax code is unclear on this matter, and the BIR has not issued a revenue regulation either,” Salceda said.
“So, I want an assurance that the BIR will consider the pledges as bequests and therefore not subject to income tax. In other words, Hidilyn and other athletes will not pay taxes under the current law,” Salceda said.
Earlier, Finance Secretary Carlos G. Dominguez III rejected the proposed measure to make tax-exempt the monetary donations and rewards given to national athletes and coaches who compete or win in international sports competitions.
“All Philippine citizens and residents have an obligation to share in the cost of the provision of public goods to society,” Dominguez said.
Also, in a separate statement last week, the BIR clarified the P10 million cash incentive that Diaz will be receiving from the Philippine government through the Philippine Sports Commission after winning the Olympic gold medal is excluded from income tax under Section 32(B)(7)(d) of the Tax Code.
Also excluded from the computation of Diaz’s gross income under Section 32(B)(3) of the Tax Code are the donations given to her by businesses, private individuals and entities. However, the BIR clarified that this “presupposes that the generous donors have already paid the donor’s tax on these items.”
“It’s a good thing that the TRAIN (Tax Reform for Acceleration and Inclusion) Law has finally lowered the donor’s tax rate to 6 percent in excess of P250,000. Otherwise, the maximum donor’s tax would be P1,004,000 + 15 percent in excess of P10 million,” it said.
Meanwhile, the ways and means committe is now preparing a substitute bill to House Bill 9891, or the Hidilyn Diaz Law, entitled, an act exempting monetary donations and rewards in favor of national athletes and coaches from taxes authored by Salceda, alongside bills authored by Quezon City Rep. Precious Hipolito Castelo and Deputy Speaker Mikee Romero.
“I introduced the broader classification of “emoluments” and not just winnings or awards, for our national athletes and coaches, within the exemption from any and all taxes, fees, and charges. This is to ensure that there is no room for interpretation or administrative discretion on the matter,” Salceda said.
“The tax code is unclear as to what happens with the pledges of Ramon Ang, Manny Pangilinan, Mikee Romero and other donors. So we introduced a very broad definition that encompasses their donations,” the lawmaker added.
Salceda said this is also proactive because the BIR tax-exempts “awards and winnings.”
“If you’re not yet a winner, that’s not a ‘winning’ if you donate to our national athletes before the games. My bill makes even those donations made before the games exempt. That’s because we have to incentivize not just supporting athletes when they win. We have to encourage stakeholders to support them even while they prepare. That’s the more sustainable way to secure Olympic wins,” Salceda said.