BIR reminds candidates to declare unspent funds, pay income tax

The Bureau of Internal Revenue (BIR) reminded candidates in the upcoming May 9 synchronized national and local elections to make sure that unutilized and unspent campaign funds from donations and contributions are properly declared and that the corresponding income taxes are paid.

BIR Commissioner Kim Henares said the candidates should comply with the rules referring to Revenue Regulation 7-2011.

Under RR 7-2011, all unspent election contributions and donations will be recorded under a candidate’s personal income and will thus be subject to five percent creditable withholding tax.

“Unutilized/excess campaign funds, that is, campaign contributions net of the candidate’s campaign expenditures, shall be considered as subject to Income Tax, and as such, must be included in the candidate’s taxable income as stated in his/her Income Tax Return (ITR) filed for the subject taxable year,” the revenue regulation stated.

Henares warned that failure to declare unutilized donated campaign funds as part of their income and who, subsequently fail to pay the corresponding income tax, will be liable for tax evasion.

“Any candidate – winning or losing – who fails to file with the [Commission on Elections] the appropriate Statement of Expenditures required under the Omnibus Election Code shall be automatically precluded from claiming such expenditures as deductions from his/her campaign contributions.

“As such, the entire amount of such campaign contributions shall be considered as directly subject to Income Tax,” Revenue Regulation 7-2011 provides.

Henares said unutilized campaign contributions should reflect in the Statement of Contributions and Expenditures (SOCE) that the candidates file with the Comelec.