When it rains, it pours.
That describes the prizes and awards Hidilyn Diaz will receive and have been promised by some business executives for winning the Philippines’ first gold medal in the Olympics.
To date, P35 million in cash, house and lot, condominium unit, motor vehicles, one-year supply of personal products and free lifetime airplane travel await her.
Based on past experience on the treatment of Filipino sports celebrities, she can look forward to lucrative endorsement or advertisement contracts for, among others, sports and health products.
This early, there are talks about the possible tax implications of those prizes and awards. Is Diaz exempt from income tax on those financial rewards? Are the donors obliged to pay a donor’s tax on them?
Some say the cash and property awards would trigger the application of a provision in the Tax Reform for Acceleration and Inclusion (TRAIN) Law, which imposes a 6-percent donor’s tax on donations in excess of P250,000.
But even if it does, that tax bite is no big deal to the business tycoons who promised to give her cash and property rewards. That additional cost is loose change for them.
Besides, that generosity would make it easier for them to convince Diaz to appear in their company advertisements in the future.
Then there is this opinion that Diaz need not worry about paying income tax on her financial windfall because of the tax exemption benefit provided for in Republic Act No. 10699 (or the National Athletes and Coaches Benefits and Incentives Act).
A close review of this law, however, would show that it does not grant income tax exemption on cash incentives to Filipino athletes who bring honor to the Philippines in regional and international sports competitions.
This law simply provides, among others, for a 20-percent discount for covered athletes and coaches in transportation services, hotels and restaurants, and the purchase of medicine and sports equipment and the grant of disability and retirement benefits to those sports personalities.
What then is the tax status of Diaz’s prizes and awards?
In 1992, Congress enacted RA 7549, which states that “all prizes and awards granted to athletes in local and international sports tournaments and competitions held in the Philippines or abroad and sanctioned by their respective national sports associations shall be exempt from income tax.”
The law also provides that those prizes and awards shall be deductible in full from the gross income of the donor; and, most importantly, their donor shall be exempt from the donor’s tax.
Unless a law was quietly passed in the intervening years repealing or modifying this law (which is doubtful considering the requirement on publication of laws before they become effective), the tax breaks granted by this 29-year-old law remain valid and binding.
Although for unexplained reasons the Bureau of Internal Revenue did not issue its implementing rules and regulations, it had upheld the effectivity of this law in several rulings it issued in connection with its application.
Thus, based on RA 7549, it is apparent no income tax is due from Diaz’s prizes and awards, and donors are not obliged to pay donor’s tax for their acts of generosity.
But the question is posed: Can the TRAIN Law not be considered a partial amendment of RA 7549 with regard to the payment of a 6-percent donor’s tax?
Probably not. Under the rules of statutory construction, general laws (for example, the TRAIN Law) cannot repeal or modify special laws (in this case, RA 7549).
For any such repeal or modification to be effective and to avoid any misunderstanding about the lawmakers’ intent, it is essential that the general law state in clear and unmistakable terms its intention on the special law concerned.
Implied or indirect repeals or amendments are frowned upon because they are susceptible to varying or conflicting interpretations.
Setting aside these legal niceties, let’s keep our fingers crossed Diaz will receive the promised prizes and awards without any hassle. INQ
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