The Bureau of Internal Revenue (BIR) has issued a circular reminding candidates and participants in the upcoming elections of their tax-related obligations.

According to Revenue Memorandum Circular no. 22-2022 dated February 21, all candidates, political parties/party list groups and campaign contributors, are required to register with the BIR, issue official receipts and withhold taxes.

“It shall be the duty of every individual candidate and political parties/party list groups, upon the filing of the certificate of candidacy, whether for local or national position to register, or to update their registration with the BIR,” the circular said.

“The revenue district office (RDO) shall maintain the list of all registered candidates and political parties/party list groups for monitoring and updating of its registration record after election,” it added.

The BIR also said that all candidates and political parties/party list groups shall pay an annual registration fee amounting to P500 and be issued a certificate of registration (COR).

A COR, however, is no longer required to be issued for individual candidates who are not engaged in business.

The BIR said all candidates and political parties/party list groups shall also register non-value added tax official receipts (ORs) to be issued for every contribution received, whether in cash or kind valued at fair market value.

“The original copies of such ORs shall be issued to the contributor/donor while the duplicate shall be retained by the issuing candidate/political party/party list,” the BIR said.

The BIR said as a general rule, campaign contributions are not included in the taxable income of the candidate to whom they were given.

“The reason being that such contributions were given not for the personal expenditure/enrichment of the concerned candidate, but for the purpose of utilizing such contributions for his/her campaign. Thus, to be considered as exempt from the income tax, these campaign contributions must have been utilized to cover a candidate’s expenditures for his/her electoral campaign during the campaign period,” the BIR said.

“Unutilized/excess campaign funds, as well as donations utilized before the campaign period, 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,” the BIR said.

Meanwhile, the BIR said contributions in cash or in kind to any candidates, political parties or party list groups are exempt from the imposition of donor’s tax.

“It is hereby emphasized that only those donations/contributions that have been utilized/spent during the campaign period are exempt from donor’s tax,” the BIR said.

The BIR also said income payments made by political candidates and political parties/party-list groups on their purchases of goods and services as campaign expenditures, and income payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates shall be subject to five percent creditable withholding tax.

The tax agency said the following are considered among those covered by expanded withholding tax, but not limited to payments for media services, printing jobs, talent/entertainment fees, rentals of both real and personal properties.

The BIR also said all political parties/party list groups and candidates shall be responsible for the preservation of records and contributions and expenditures, together with all pertinent documents.

“Every candidate and treasurer of the political parties/party list groups shall submit the statement of contributions and expenditures to Comelec and RDO where the candidates/political parties/party list groups are registered within 30 days after the election,” the BIR said.

“The registration of individuals in their capacity as candidates shall automatically end 10 days after the deadline of filing of the quarterly remittance return of creditable income taxes withheld following the day of the election,” it added.

The BIR said all candidates, political parties and party list groups who failed to register and comply with the requirements of the BIR will be subjected to penalties under the Revised Consolidated Schedule of Compromise Penalties for Violations of the National Internal Revenue Code.(A. Celis, Malaya)