The Bureau of Internal Revenue (BIR) on Thursday reminded candidates and political parties running in the elections to comply with tax rules on campaign fundraising and spending, stressing that doing so is part of their legal responsibilities.
BIR Commissioner Romeo Lumagui Jr. said all candidates and political parties that accept campaign contributions or spend on their campaigns are required to register with the agency.
“When they pay their suppliers, they must withhold 5 percent from the payments,” Lumagui said in an interview with state-run PTV.
“If the amount of contributions they receive exceeds what they actually spend, they are required to pay income tax on the excess,” he added.
Lumagui also emphasized the need to apply for non-VAT official receipts, noting that receipts and invoices must be issued to all donors, whether the donations are in cash or in kind.
“All campaign expenses must be itemized and submitted as part of the Statement of Contributions and Expenditures (SOCE) to the Commission on Elections (Comelec) and also to the BIR so we can ensure full compliance,” he said.
When asked whether candidates may keep unused campaign funds, the BIR chief confirmed this is allowed—as long as proper taxes are paid.
“They may keep the excess funds; there’s no issue with that as long as they pay income tax on it. They must subtract the amount spent from the total contributions and pay tax on the remainder,” Lumagui explained.
Failure to follow these processes carries serious consequences, he warned.
“If they fail to comply, there are penalties involved. It can be considered tax evasion. If proven, it could lead to criminal charges. There are also potential consequences with Comelec, including disqualification,” he said.
The BIR cited a 2017 Supreme Court ruling which states that candidates who fail to file their campaign expense reports twice within 30 days after election day are permanently disqualified from holding public office.
