RMC No. 30-2016: Reminds candidates of the May 9, 2016 National and Local Elections of their tax obligations

Summary

RMC No. 30-2016 reminds candidates in the May 9, 2016 National and Local Elections of their tax obligations, covering registration, receipts, books, and tax treatment of campaign contributions and expenditures.

Key points

1. Registration. Candidates, political parties and party list groups must register with the BIR, issue Official Receipts and withhold taxes under RR No. 8-2009, as amended by RR No. 10-2009. Political parties register with the RDO over their head or principal office. Individual candidates register or update upon filing the certificate of candidacy with the RDO over the political subdivision, or else over their residence or registered address, and that registration ends thirty (30) days after the election.
2. Receipts and records. They keep adequate books such as a Cash Receipts Journal and Cash Disbursements Book, and register ORs (at least in duplicate) for every contribution, in cash or in kind valued at cash equivalent or fair market value. RDOs may issue BIR-Printed Non-VAT ORs to candidates without Authority to Print, and unused ones are surrendered with usage data within ten (10) days after the election. Records are kept for at least five (5) years after the election.
3. Income Tax on campaign funds. Under RR No. 7-2011, contributions are exempt only if used for campaign expenditures. Unutilized or excess funds are taxable, and a candidate who fails to file the COMELEC Statement of Expenditures cannot deduct expenditures, making the entire contribution taxable.
4. Returns and due dates. Self-employed candidates declare excess funds in BIR Form No. 1701Q for the quarter ending June 30, 2016 by August 15, 2016, with no further deduction. Pure compensation earners use BIR Form No. 1700 for 2016 by April 15, 2017, and others file a short-period return for January 1, 2016 to May 9, 2016 on BIR Form No. 1700 by August 15, 2016. Political parties and party-list groups file BIR Form No. 1702Q for the quarter ending June 30, 2016 by August 29, 2016.
5. Donor’s Tax. Only donations or contributions used during the COMELEC campaign period are exempt from Donor’s Tax. Donations used before or after the period, and corporate donations violating Section 36 (9) of the Corporation Code, are subject to Donor’s Tax and not deductible as political contributions.
6. 5% creditable withholding tax. Under Section 2.57.2 (X) of RR No. 2-98, as amended, payments for goods and services as campaign expenditures or contributions bear 5% CWT, whatever the source of funds, including media, printing, talent fees, leases, surveys and consultancy. The tax is remitted by the 10th day of the following month on BIR Form 1601-E, and payors file BIR Form 1604E and the COMELEC-stamped Statement of Contributions and Expenditures by March 1, 2017, or for temporary withholding agents within 30 days after the election. Expenses not subjected to the 5% CWT are not utilized campaign funds.

Who is affected

• Candidates in the May 9, 2016 National and Local Elections
• Political parties and party list groups
• Payors and contributors making campaign payments

Deadlines and effectivity

• Individual candidate registration ends thirty (30) days after the election
• Unused Non-VAT ORs surrendered: within ten (10) days after the election
• Excess funds, BIR Form No. 1701Q: not later than August 15, 2016
• BIR Form No. 1702Q: not later than August 29, 2016

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.