THE Bureau of Internal Revenue on Friday reminded candidates, political parties and campaign contributors to comply with their tax duties and obligation, adding that these parties should register and secure official receipts with the tax agency.
Under Revenue Regulations 07-2011 issued by Commissioner Kim Henares on Feb. 16 2011, any unused or excess campaign funds shall be treated as income for purposes of taxation and all contributions received by the candidate should be reported.
The said ruling is also backed by Revenue Memorandum Order No. 7-2015 wherein any single non-issuance of official receipt upon receipt of contribution shall be penalized with a fine of not less than P1,000 but not more than P50,000 and imprisonment of not less than four years.
BIR said political parties and party-list groups should register with the Revenue District Offices having jurisdiction over their head office or principal office.
Individual candidates, on the other hand, should register with the RDO having jurisdiction over the political subdivision where the candidate is seeking election and if this is not applicable, registration shall be made at the RDO having jurisdiction over their principal residence or registered address.
Upon registration, BIR will tag them as withholding tax agents, and they must withhold the corresponding withholding tax for election related expenses, such as but not limited to purchases of campaign materials.
Further, expenditures incurred shall be reported and unreported expenses, as well as those not subjected to appropriate withholding tax, will not be allowed as deductions from contributions.
“Excess contributions will be treated as income subject to income tax,” the BIR said.
The registration of individual candidates shall automatically end after 30 days from the date of election while the registration of political parties and party list groups shall subsist.
Meanwhile, Henares earlier told reporters in the kick-off of BIR’s new campaign ad in Quezon City that they would need to issue an administrative order for the candidates who are non-compliant in the regulation.
She also mentioned that the BIR is currently in the middle of talks with the Commission on Elections for the statement of campaign and expenditures so they can counter check if the political candidates have complied with regulations.