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Taxes Chase Manny Pacquiao Out of U.S. For Next Fight

Posted on 02/15/2013

Now all of a sudden the high tax rates in the United States are a problem for Manny Pacquiao.

As a result, he will not be competing next within U.S. borders.

That word comes down from Michael Koncz, the “advisor” in the camp, who cites a 39.6% tax as a reason the folks in Vegas or Texas, or anywhere else where they fly the American flag will not see him for a proposed rematch with Juan Manuel Marquez, if ever.

Thank God for pay-per-view television, right?

Pacquiao has fought fifteen times in the state of Nevada. Actually, that has been somewhat advantageous, in the respect that there is not a state income tax there. But that certainly does not exempt him from federal taxes. And needless to say, he fits into a pretty high bracket.

Bob Arum, who would be promoting a fight with Marquez, or any other Pacquiao bout, would love to have it at the MGM Grand in Las Vegas, but the circumstances have become too intolerable for Pacquiao and his people to deal with.

There are several sites that could be considered, including Mexico, where Marquez could draw quite a crowd, but in the end, it will boil down to one that could be attractive all the way around.

The target is Macau, a province in China that is a haven for casino gambling, and a very viable one, from many perspectives, including the fact that Pacquiao wouldn’t have to pay taxes there to the same extent as he would if the fight were being held in the United States.

It’s simple arithmetic; if he makes, say $30 million in the U.S., and has to pay the tax, he will wind up with a little more than $18 million. That makes it feasible to fight in Macau, even if his purse was $7 million less (based on Macau’s top marginal income tax rate of 12%). That makes sense to Arum as well, quite obviously. So maybe the casino site fees, or live gate, are less than they would be in Las Vegas, but the PPV numbers, if the time difference can be dealt with reasonably, should stay rather consistent.

Or will it?

On the surface, it would seem there is the distinct possibility that the pay-per-view revenue on the fifth fight, coming off Marquez’s only win of the series, could be the biggest yet. Then again, there is the possibility that it won’t. Arum says he believes that if the fight were not held in the U.S. or Canada, that could potentially drop the PPV money as much as 50%, and he says he has the research to prove it.

That’s called a double-edged sword.

There’s no solid commitment to Macau, and speculation is that there will be some competitive bidding between resorts there and in Singapore.

Koncz says that Pacquiao is steadfast, and that everybody else had better figure out the whole thing on their own. as the commodity, Pacquiao has more of a degree of control in this matter than other fighters might. Koncz is also looking for a branding opportunity, inasmuch as Pacquiao has an chance to spread himself a little better through Asia, which is a natural. It is not just idle talk that it may be good for his “globalization” for him to get out of the U.S. for a while.

Pacquiao has been involved with tax pressure at home, as Filipino authorities have sought to obtain a correct accounting of his income, which is thought to be under-reported. He and the Bureau of Internal Revenue (BIR) have still not resolved things to the BIR’s satisfaction, and so there may yet be some repercussions from that.

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