• MVP is underpaid chairman of the board



    THE Bureau of Internal Revenue ranks the top 500 taxpayers by their annual tax payments which it posts on its website. It omitted from the list the taxable incomes of 500 Filipinos who made it to BIR’s elite ranking. The omission may lead the more curious observers to conclude that they are being deprived of their right to know who among the country’s elite are richer than others.

    Yet, there is no reason for anyone among us—Duedligencer included—to despair. Despite BIR’s omission of the more important facts in its report, we can still satisfy our curiosity: Let us make our own computations to arrive at the taxable incomes of BIR’s top 500 tax payers by following BIR’s own formula.

    Duediligencer did a series of computations to learn the basis of the tax payments of Manuel Velez Pangilinan, who is also known by his initials MVP. As suggested by BIR in its website, the tax computation formula is simple: a taxpayer pays “P125,000 for the first P500,000 plus 32 percent of the excess over P500,000.”

    Applying this formula, Duediligencer computed for the unknown taxable income of businessman Jacinto L. Ng. As the biggest income earner in 2014, he paid income tax of P280,107,497. This means his tax payment was given but not his taxable income.

    Getting the unknown
    The formula does not simply involve computing for the unknown because BIR assesses big taxpayers P125,00 for the first P500,000. Thus, deducting P125,000 from Ng’s tax payment of P280,107,497 equals P279,982,497.

    To get Ng’s taxable income, I had to deal with only the tax payment and the fixed tax rate of 32 percent as the known factors. Since P125,000 is due the first P500,000, I arrived at his taxable income of P874,945,303 by dividing P279,982,497 by 32 percent, which I converted first to decimals, which was 0.32.

    The amount of P874,945,303 is not Ng’s final taxable income in 2014. I added the first P500,000 for which the businessman paid P125,000. By adding this to P874,945,303, I came up with the final taxable amount of P875,445,303, which I assumed was BIR’s basis for assessing Ng his final income tax payment of P280,107,479 for the year 2014.

    This is the same formula which Duediligencer used in looking for MVP’s taxable income from 2012 to 2014 using only on his annual tax payment in my computations.

    MVP as chairman
    Pangilinan is the chairman of five listed companies, in which the Indonesian-controlled First Pacific Co. of Hong Kong is a significant, if not the majority, stockholder. In addition, he is also vice chairman of Roxas Holdings Inc., which is also a listed company but does not belong to First Pacific group in the Philippines.

    In all five listed companies, Pangilinan is chairman of the board. These are Metro Pacific Investments Corp. (MPIC); Philippine Long Distance Telephone Co., which has been renamed PLDT Inc; Manila Electric Co; Philex Mining Corp; and Philex Petroleum Corp.

    Despite his chairmanship of all five listed companies that are identified with First Pacific, Pangilinan is not as highly paid as few if not many either think or perceive he is. From 2012 to 2014, he reported taxable income of P260,948,109 for which he paid an income tax of P83,398,395.

    By year, MVP’s taxable income totaled P77,208,447 in 2012; P98,972,887 in 2013; and P84,766,775 in 2014.

    This would mean that as one of the five highest paid executives of Metro Pacific group, MVP received in 2012 only an average of P15,441,689 a year from each of the five companies as chairman of the board. Of course, he got substantial pay raise in 2013 when each raised to P19,794,577 its average contribution to MVP’s compensation, then reduced it to P16,953,355 in 2014.

    Available filings still posted on the website of the Bureau of Internal Revenue showed MVP was No. 30 in the ranking of top 500 taxpayers in 2012 with his payment of P24,671,703.

    MVP went up in the ranking but three notches in 2013. His tax payment of P31,636,324 placed him at No. 27. In 2014, he dropped to No. 45 on P27,090,368 tax payment.

    MPIC compensation
    Among the five companies closely identified with First Pacific, only Metro Pacific lists Pangilinan, being the chairman, as one of the five highest paid executives.

    The four others are Jose Ma. K. Lim, president and chief executive officer; David J. Nicol, chief finance officer; Robin Michael Velasco, vice president-human resources; and Albert William L. Pulido, vice president- investor relations.

    As a group, Pangilinan and company received salary of P97,864,529 and bonus of P107,715,641 in 2014; and P82,272,252 and P75,153,663 in 2015 when it MPIC also paid them additional compensation of P27,533,217 classified only under “others.”

    This year, MPIC projected the group’s salary at P94 million and their bonus at P75 million. Aside from these, they would be paid P300,466,535 in other pays and perks which were defined under “others.”

    As I suggested, you, too, can successfully search for the missing taxable income of the top 500 tax payers by using BIR’s formula: P125,000 for the first P500,000 and 32 percent of over P500,000. Deduct P125,000 from the individual tax payments, then divide the result by 0.32. Finally add P500,000 to the quotient, which is the answer to the process division, to get the final taxable income.

    If BIR would find my application of its own formula to be correct, then follow the procedures. Happy computing!



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