September 29, 2022

BIR Reminds Political Candidates to Declare Unused Contributions


The Bureau of Internal Revenue (BIR) has asked political candidates to report their unused contributions as income, maintain tax records and issue receipts for political contributions.

BIR issued the reminders in Circular No. 22-2022, which applies to all candidates, political parties, party groups and campaign contributors.

In most cases, campaign contributions are not classified as taxable income because they are generally not used for personal expenses, the BIR said. However, campaign funds not used or used before the campaign period are subject to income tax and must be reported on tax returns.

“Thus, to be considered exempt from income tax, these campaign contributions must have been used to cover a candidate’s election campaign expenses during the campaign period,” the BIR said.

The circular, published on Monday, requires all candidates and political formations to issue VAT free (value added tax)Iffinancial receipts for each contribution received, in cash or in kind, at fair market value.

Similarly, only donations used during the campaign period are exempt from the donation tax.

The campaign period officially began on February 8. The elections will take place on May 9.

Goods and services purchased with campaign funds are subject to a 5% withholding tax. These include payments for media services, printing, entertainment and property rental.

Free use of land and campaign equipment should be reported as an expense, based on prevailing rates.

The omnibus election code requires all candidates and political groups to be required to keep records of contributions and expenses. After the election, they must submit a statement of these contributions and expenses to the Electoral Commission. Jenina P. Ibanez