BIR: “All candidates, political parties/party-list groups, and campaign contributors are required to register with the BIR.”
BIR — The Bureau of Internal Revenue warns of penalties against unregistered and tax-evading political parties and candidates.
The tax bureau has reminded political candidates, political parties, as well as campaign financiers of their obligations ahead of May 2022 national and local elections, warning to slap penalties against tax evaders and unregistered taxpayers.
Internal Revenue Commissioner Caesar Dulay issued the Revenue Memorandum Circular on February 21, similar to his predecessors at the tax bureau who issued such reminders during election campaign season.
“All candidates, political parties/party-list groups, and campaign contributors are required to register with the BIR, issue official receipts, and withhold taxes [under existing laws and regulations],” Dulay said. “The registration of political parties or party-list groups shall be made with the revenue district office having jurisdiction over their head office or principal office.”
Revenue Memorandum Circular No. 22-2022 listed down the documentary requirements, including pertinent BIR forms, as well as copies of COCs (certificates of candidacy) from the Commission on Elections (COMELEC).
On top of paying a PHP 500 annual registration fee and obtaining a certificate of registration from the tax bureau, political candidates and parties must keep and register their accounting books and other records.
Dulay also said that all unspent or excess campaign funds as well as donations “shall be considered as subject to income tax” and must be included in the taxable income as stated in the income tax return (ITR).
“No further deduction, either itemized or optional, shall be made against the said taxable income,” Dulay said.
Further, any political candidate, political party, or party-list group, whether winning or losing, who fails to file with the poll body the statement of contributions and expenditures required under the Omnibus Election Code (Batas Pambansa Blg. 881) shall be automatically precluded from claiming such expenditures as deductions from the campaign contributions, making the entire amount directly subject to income tax.
As for donor’s tax, Dulay said that the exemption will only apply to “donations/contributions that have been utilized/spent during the campaign period” as set by the poll body.
“Donations made by corporations in violation of the Corporation Code of the Philippines are subject to donor’s tax and may not be deducted as political contributions on the part of the donor/corporation,” Dulay said.
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Dulay also reminded political candidates and political parties that income payments for their purchases of services and goods as campaign expenditures will be subject to 5% creditable withholding tax (CWT).
Based on a report on Inquirer, all taxpayers must file the pertinent BIR CWT returns plus the statement of contributions and expenditures stamped “received” by the poll body on or before March 1, 2023.
All political candidates and parties must also preserve their records of contributions and expenditures for at least 5 years after the elections and must be ready to produce those documents if they were to be inspected by the BIR Commissioner.
After the elections, all political candidates and political parties must submit to the poll body and their BIR revenue district office their respective statements of contributions and expenditures within 30 days after the May 2022 elections.
Dulay also warned that all political candidates, political parties, and party-list groups who failed to register and comply with the requirements of the tax bureau will be subjected to penalties under the Tax Code.
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