X stands for Zobel brothers’ taxable income in 2014

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EMETERIO SD. PEREZ

DESPITE their big compensation, the two Zobel brothers did not earn enough money in 2014 for them to top the list of the Philippines’ 500 biggest taxpayers in 2014. Their combined tax payments of more than P72 million landed Jaime Augusto Miranda Zobel de Ayala and his younger brother, Fernando at only No. 23 and No. 25, respectively.

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The more curious among the readers of The Manila Times would not know how much the Zobel siblings reported as their personal income. For reasons only the Bureau of Internal Revenue (BIR) and its examiners knew, they either forgot or intentionally did not include the amounts of taxable income of the country’s top 500 earners.
Could the BIR be accused of the sin of omission?
In presenting the table of top 500 income taxpayers, the BIR omitted what should have been the sixth column. However, it skipped the basis for its tax levies, by getting rid of the numbers that would have been more interesting to read.

Missing 6th column

For reasons unknown, the BIR list showed only the tax payments of P37,465,927 (No. 23) and P34,724,295 (No. 25) paid for taxable year 2014 by Jaime Augusto and his younger brother Fernando, chairman and vice chairman respectively of Ayala Corp. (AC).
Why didn’t the BIR’s table of biggest taxpayers carry a sixth column? Don’t ask me because I don’t have the answer.
As AC’s majority owners, the Zobel brothers must have earned a lot to have paid total taxes of P72,190,222 in 2014. How much could they have earned during said year?
The BIR failed to provide the answer or answers. It left the public imagining how the agency’s collectors could have left the people filling the blanks with the numbers that they could only estimate.

The missing numbers

In the absence of column six in the table of BIR’s top 500 taxpayers, the public could only do their own computations.
Haven’t the public learned arithmetic when they were still in their primary grades? Let them find the missing x, which is the single letter in the English alphabet that stands for the unknown.
Going back to the Zobel brothers, if Jaime Augusto the elder paid the BIR P37,465,927 and Fernando P34,724,295, how did the BIR arrive at their personal income t axes?
Of course, for reasons known only to BIR collectors and examiners, the taxable incomes of the two Zobels should have fallen under Column 6 of the ranking that the tax agency did not find necessary.
Really? Then why not let Due Diligencer do the worrying and some calculations.
Try surfing bir.gov.ph to find the formula in finding the taxable income, which Due Diligencer discovered to be as follows: P125,000 for the first P500,000 and 32 percent for the excess over P500,000.
Computations

Following the BIR’s suggestion, we begin with Jaime Augusto’s tax payment of P37,465,927. Subtracting P125,000 from that amount yields P37,340,927. Divide it by 32 percent and you get P116,690,396.875. Add P500,000 and you finally arrive at P117,190,396.875.
Here is the result of Due Diligencer’s computations to get the taxable income of Fernando the younger: P34,724,295 – P125,000 = P34,599,295 divided by 32 percent = P108,122,796.875 + P500,000 = P108,622,796.875.
Based on the above computations, the BIR people must have assessed the tax payment of Jaime Augusto on his taxable income of P117,190,396.875 and that of Fernando on P108,612,396.875.
Translated further, Jaime Augusto and Fernando must have earned P9,765,866.40625 and P9,051,066.40625 a month, respectively.
Due Diligencer stopped the computations here because it would be unfair to get their hourly rate when, more often than not, business owners think of their jobs when playing golf and think of golf when they are at work.

Compensation filings

By the way, as AC’s chairman and vice chairman respectively, Jaime Augusto and Fernando were among the holding company’s five highest paid executives in 2014. As a group, they and three others were paid P198.32 million in salaries and bonuses of P160.15 million, or a gross compensation P358.47 million.
Based on projections, AC estimated the 2014 gross compensation of the two Zobels and three other top executives at P306 million divided into salaries, P213 million; and bonuses, P93 million.
The only problem with the compensation filings posted on the website of the Philippine Stock Exchange is that they do not individualize the pays and perks of each of the five highest paid executives. It would be up to the public to make their own guesses and, possibly, draw their own conclusions even if they would be proven wrong by the BIR’s report on income tax payments.
For the sake of the public who trade on listed shares, the SEC might want to promulgate a rule requiring the individualization of compensation. What for are regulators? Just asking.

esdperez@gmail.com

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