BIR reminds bets on campaign taxes

DUMAGUETE CITY, Philippines — All those involved in the elections are now reminded by the BIR here of their tax obligations to the government.

Revenue District 79 officer-in-charge Richard Oquendo of Dumaguete City specifically cited provisions of Revenue Regulations No. 8-2009, also known as the primer on Creditable Withholding Tax (CWT) on campaign expenditures, covering 5 percent of payments made by political parties and candidates of local and national elections for their campaign expenditures.

Also subjected to the 5 percent, CWT are payments made by individuals or juridical persons for their purchases of goods and services intended to be given as campaign contributions to political parties and candidates.

Oquendo said the 5% CWT is not a tax on the candidate or political party or the contributor but a tax on the supplier of goods and services pertaining to campaign expenditures.

He explained it is a tax on the income of these suppliers of goods and services who are earning income for providing the materials and services for the campaign requirements of candidates, such as posters, streamers, t-shirts, tarpaulins, caps, jingle production, ballers and all others that promote the candidacies of individuals.

This tax is collected by means of the expanded withholding tax system where the candidates, political parties and contributors when making payments for the supply of the goods and services are required under Section 57 (B) of the National Internal Revenue Code of 1997, as amended, to deduct a uniform amount of 5 percent of the agreed transaction price and remit this to the BIR, said Oquendo. 

The BIR official said observations showed massive spending by local and national candidates as reflected on the election campaign materials posted everywhere, some of them are even oversized. Almost all radio stations are even flooded with hourly block time of candidates, he said.

Oquendo presumed that all the candidates, especially reelectionists are aware of the provisions of the law because it has been implemented for over 30 years since, so he is now asking them for their civic duty of assisting in nation building through payment of correct taxes.

For the supplier of the goods and services, the withheld amount shall be considered a tax credit or deduction against his or her total income tax liability, which will be computed annually upon remittance.

On the other hand, cash donations are not subject to the payment of any donor's tax pursuant to provisions of the election code in relation to the tax code, unless such cash donations are paid directly to the supplier of the goods and services, Oquendo clarified.

Candidates, political parties or contributors who refused to comply with such regulations will not be necessarily violating provisions of the election code, but on the tax code, and as such, shall be subject to the penalties and sanctions imposed therein, he added. (FREEMAN)