Ahead of May 13 polls, BIR reminds candidates, parties of tax obligations

The Bureau of Internal Revenue main office in Quezon City. (File photo from Philippine Daily Inquirer)

MANILA, Philippines–It’s election season once again, and the Bureau of Internal Revenue (BIR) reminded candidates, political parties and party-list groups, as well as campaign contributors not to forget paying their taxes dues.

Revenue Memorandum Circular (RMC) No. 31-2019 issued by Internal Revenue Commissioner Caesar R. Dulay on March 7 reiterated the need among those participating in the May 13 midterm polls to register with their respective revenue district offices (RDOs), pay the P500 annual registration fee, and also register and keep accounting records.

But the certificate of registration (COR) was “no longer required to be issued for individual candidates who are not engaged in business,” RMC 31-2019 read.

Also, “individual candidates may opt to use a simplified set of bookkeeping records, as long as it can provide accurate information,” the BIR said.

These accounting records and documents that kept tab of contributions and expenditures were required to be preserved in the next three years after the close of taxable year 2019.

Under BIR rules, all candidates, political parties and party-list groups must also register non-value-added tax (VAT) official receipts, which they should issue for all the contributions they get, whether in cash or in kind.

For contributions in kind, receipts should indicate their fair market value, the BIR said.

The BIR also reminded candidates and political parties that income payments for their purchases of goods and services as campaign expenditures will be subject to 5-percent creditable withholding tax (CWT).

The same 5-percent CWT must be paid for income payments made by individuals or juridical persons for goods and services intended as campaign contribution, the BIR said.

“Expenses that were not subjected to the 5-percent CWT are not considered utilized campaign funds, and the candidates, political parties/ party-list groups are precluded from claiming such expenditures as deductions from his/her/its campaign contributions. As such, the full amount corresponding to said expense shall be reported as unutilized campaign funds subject to income tax,” according to the BIR.

“Only those donations/contributions that have been utilized/spent during the campaign period as set by the Comelec [Commission on Elections] are exempt from donor’s tax. Donations utilized before or after the campaign period are subject to donor’s tax and not deductible as political contribution on the part of the donor,” it said.

“Unutilized/excess campaign funds, net of the candidate’s or political party’s/party list’s campaign expenditures, shall be considered as subject to income tax and as such, must be included in their/his taxable income as stated in their/his income tax return (ITR). No further deduction, either itemized or optional, shall be made against the said taxable income,” it added.

According to the BIR, “any candidate or political party/party list group, whether winner or loser, who fails to file with Comelec the Statement of Contributions and Expenditures required under Omnibus Election Code shall be automatically precluded from claiming such expenditures as deductions from the campaign contributions making the entire amount directly subject to income tax.”

Within 30 days after the election, BIR rules stated that all candidates and treasurers of political parties and party-list groups must submit the Statement of Contributions and Expenditures to Comelec and the RDO where they were registered. /jpv