NAGA CITY, Philippines—Donations made to candidates are tax exempt, but once the money is used, it is then subject to a five-percent withholding tax.
Socorro Lafuente, revenue district officer (RDO) of Naga City, issued the clarification on March 15 after the start of a nationwide Bureau of Internal Revenue (BIR) campaign requiring all candidates and party-list groups to maintain records of donations and expenditures.
An orientation was held that day to inform candidates, party-list groups and their representatives that the BIR was monitoring their donations and expenses.
Lafuente said the monitoring was based on BIR Memorandum Circular No. 15-2013 that came after the Commission on Elections (Comelec) issued its rules and regulations governing the finances of candidates and their disclosure.
She said the BIR required all candidates to record their donations and expenses in a book of accounts so the agency could monitor the taxable items.
Lafuente said all candidates must register their names and books of accounts and their tax identification numbers for the “monitoring of collectible items.”
She said it should be the duty of every candidate, party, their treasurers and representatives to issue receipts for every contribution received and to obtain receipts for every expenditure made.
“The candidates and party-list groups are expected to keep detailed, full and accurate records of all the contributions received and expenditures incurred,” said Lafuente.
She said they were also required to issue official receipts, at least in duplicate, registered with the revenue district office and to preserve for three years the records of contributions and expenditures for future reference.
Lafuente said the donations would be taxed depending on the amount, with P50,000 and less eligible for a tax exemption, while P50,000 to P100,000 taxed a minimum of 1.5 percent.
She said the bigger the donation, the bigger the tax. Donations over P5 million would be charged a minimum tax of P358,750, plus 20 percent for amounts in excess of P5 million.
Lafuente said the books of account pertaining to donations and expenditures would automatically be ended 30 days from the date of elections.