Hidilyn won’t be taxed; What about other athletes?

Hidilyn Diaz, who will go down in history as the first Filipino to win the Olympic gold medal since the Philippines joined the competition in 1924, is set to receive P10 million from the government.

Republic Act No. 10699, the act expanding the coverage of incentives granted to national athletes and coaches, which was signed into law in 2015 by the late President Benigno Aquino III, guarantees the cash prize.

According to Section 8 of the law:

“National athletes and other athletes who are not officially or currently members of the national training pool but who have otherwise represented the country in international sports competitions, who win gold, silver and bronze medals in international sports competitions shall be entitled to cash incentives ... For Gold Medalists: Ten million pesos (P10,000,000) and an Olympic Gold Medal of Valor to be issued by the PSC (Philippine Sports Commission) for Summer Olympic and Winter Olympic Games.”

The Bureau of Internal Revenue has made it clear in their recent statement: Hidilyn’s prize will be tax-exempt. To quote:

“In Hidilyn Diaz’s case, aside from the most precious Olympic gold medal we have long awaited for, she will be receiving a cash incentive of P10 million from the Philippine government, through the Philippine Sports Commission. Certain businesses, politicians and other entities have also pledged cash rewards, real estate, free airfare and many more.

Incentives

The P10 million cash incentive mandated under RA 10699, shall be considered an exclusion from gross income by virtue of Section 32(B)(7)(d) of the Tax Code.”

And about the private donations from the different companies and individuals who have suddenly swooped in after she has won?

“The donations given to her by businesses, private individuals and entities shall also be excluded from the computation of her gross income under Section 32(B)(3) of the Tax Code.”

But someone will still pay for taxes, although it won’t be Hidilyn—it will be the donors.

“The latter however presupposes that the generous donors have already paid the donor’s tax on these items.

It’s a good thing that the Tax Reform for Accelaration 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.”

Okay, But What About Our Other Athletes?

So Hidilyn won’t be taxed. But what about our other athletes?

Tax Code

According to Section 32(B) (7) (d) (Exclusions from Gross Income) of the Tax Code, under Prizes and Awards in Sports Competitions:

“All prizes and awards granted to athletes in local and international sports competitions and tournaments whether held in the Philippines or abroad and sanctioned by their national sports associations.”

Endorsements, however, are a different thing as well as salaries and other sources of income as under Section 32 (A) of the Tax Code.

For example, if another Olympic medalist decides to rent out her house/condominium, write a book about her experience as an Olympian, or participate in any event in a professional capacity, any income derived from these activities will be subject to income tax.

Let’s summarize that clearly: Olympic Medal: Tax-Exempt; Earnings as a Professional: Taxable; Royalties from Books: Taxable; Income from Property Rental: Taxable INQ

Kevin Baldonado is the chief legal officer of Taxumo, a web application that helps small business owners and professionals with their taxes.