Taxing the Queen of the Universe

On January 23 the Queen of the Universe, Pia Alonzo Wurtzbach, returned to the Philippines after winning the prestigious Miss Universe 2015 crown.

However, with Pia’s return came with questions regarding her tax liability. Interestingly, Congress saw it fit to exempt her from income tax as a way of honoring the beauty queen. But legally speaking, is Pia subject to tax for winning Miss Universe crown?

Section 23(A) of the National Internal Revenue Code, as amended, provides that a citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines. By way of exclusion, the same Code in Section 32(B)(7)(c) provides that prizes and awards are excluded from the computation of an individual’s gross income if the prizes and awards were “made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement but only if: [i] the recipient was selected without any action on his part to enter the contest or proceeding; and [ii] the recipient is not required to render substantial future services as a condition to receiving the prize or award.”

Let us analyze the quoted provisions.

First, resident citizens are taxable on all income from within and without the Philippines.

Pia is a resident Filipino citizen. Thus, even if she was not based here in the Philippines during her reign, her compensation package as Miss Universe will constitute taxable income on her part.

Her crown, which is valued at $300,000, should be excluded from her gross income since said crown is meant to be returned once her reign ends.

Second, to be excluded, the prize or award must be made in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement.

Winning the Miss Universe crown is not a religious, scientific, or literary achievement. Tax authorities and legal luminaries agreed that an award that would qualify for income-tax exclusion under this category would pertain to the likes of the Nobel Peace Prize or the Ramon
Magsaysay Award.

Third, the recipient was selected without any action on his part to enter the contest or
proceeding.

Pia won the much-coveted Miss Universe crown after three years of joining the Binibing
Pilipinas contest.

And fourth, the recipient is not required to render substantial future services as a condition to receiving the prize or award.

Pia is tasked to serve as the Miss Universe for a year, championing and promoting the cause of the Miss Universe Organization.

Based on the foregoing, it seems clear that Pia’s winnings in the recently concluded Miss Universe 2015 are indeed subject to Philippine income tax.

I love Pia, and I am one with the Filipino people in honoring what she has achieved for our country. However, legally speaking, the Queen has to pay income tax. Of course, Congress exempting her from payment of income tax, which, if I may say, I fully support, is another topic.

For comments, you may e-mail me at lpkapunan@kapunanlaw.com.