Are Hidilyn Diaz’s cash incentives taxable?

By Francis Allan L. Angelo

Olympic gold medalist Hidilyn Diaz will receive at least P40.5 million in cash incentives as of latest count.

Here’s how it breaks down so far:

-P10 million from the government per Republic Act 10699 (An Act Expanding the Coverage of Incentives Granted to National Athletes and Coaches);

-a P10-million pledge from the Manny V. Pangilinan Sports Foundation;

-a P10-million pledge from San Miguel Corporation CEO Ramon S. Ang;

-a P5-million pledge from businessman Dennis Uy;

-P3-million from the 1-PACMAN Party List; and

-P2.5-million from the local government of her hometown, Zamboanga City.

She also stands to receive a house and lot in Tagaytay City and a condo unit from developer Megaworld and freebies from an airline and a fuel company.

But are these taxable or not?

Lawyer and Daily Guardian opinion contributor Anfred Panes said Diaz is not accountable for the 6 percent donor’s tax levied on “amounts in excess of PHP250,000 under Section 11 of Revenue Regulations No. 12-2018 in conjunction with the Tax Reform for Acceleration and Inclusion Law (TRAIN) Law.”

“Elsewise stated, the donor private entities, including Manny V. Pangilinan Sports Foundation and San Miguel Corporation are liable for 6% donor’s tax on the amount in excess of PHP250,000.00 per taxable year. Hidilyn will not pay for the donor’s tax. It is the donor/giver who is liable for the tax. Thusly, MVP Sports Foundation will pay PHP585,000.00 to the State, an amount constituting 6% of PHP 9,750,000.00 out of its 10-million-peso donation because only PHP250,000.00 donation is not charged with donor’s tax.  The same applies in the case of San Miguel Corporation’s 10-million-peso pledge,” Panes said.

He noted that taxes are vital to keeping the country together, especially during the pandemic.

“Tax is our state’s lifeblood. While we may seasonably engage in socio-political and legal discourses out of our knee-jerk reaction to the recent Olympic gold win of Hidilyn Diaz, the rule on taxability of one’s earnings and gifts is inevitable subject to exceptions under the Tax Code. Nevertheless, taxes allowed our state machineries to function – at least to deliver efficacious and equitable basic social services.”

In a Facebook post, business consultant @TaxAblePH cited the Tax Code, as amended, which states that 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 shall not be included from gross income and shall be exempt from tax.

“Although RA No. 10699 did not mention as to the taxability of the cash award, the exemption may apply to the prizes and awards granted by the government to athletes in Olympics, an international sports competition sanctioned by Samahang Weightlifting ng Pilipinas, following the above provision from the Tax Code. In short, the P10M cash reward is arguably exempt from income tax.”

@TaxAblePH also said that cash prizes from the private sector may be considered as donations.

“Any person, natural or juridical, resident or non-resident, who makes any transfer, or causes to transfer property by gift or donation or contribution, whether direct or indirect, whether in trust or otherwise, whether real, personal, tangible or intangible (except those which are exempt from tax under the Tax Code, as amended or other special laws) is required for every donation to pay the required donor’s tax due (6%).”

Here, the donor’s tax is a liability of the donor and not by the donee. Hence, Diaz should receive the cash incentives from the private sector in full since the donor (the private organizations or individuals) is the one responsible for the donor’s tax. Therefore, Diaz should receive the cash prizes in full and worry-free from the taxes, @TaxAble added.

Atty. Panes said Diaz’s cash incentives is more than just at least P40.5 million and counting.

“The Filipino spirit is once again beaming with pride by the almost centennial accomplishment of a gold Olympic medal. Her victory is more than just ounces of gold; more than just tax talks. Her victory just marked our history. She is a legend,” he added.