RMC No. 38-2018: Reiterates the guidelines in registration, updates and other tax compliance requirements of candidates, political parties/party list groups and campaign contributors

Summary

RMC No. 38-2018 reiterates the registration, update and tax compliance guidelines for candidates, political parties and party list groups, and campaign contributors.

Key points

1. Registration duty. All candidates, political parties, party list groups and campaign contributors must register or update with the BIR. The Client Support Section of the RDO with jurisdiction verifies registration and updates existing records, including after the elections.
2. Registration and records. Candidates and parties pay an Annual Registration Fee of Five Hundred Pesos (P500.00) and receive a Certificate of Registration. They keep and register books such as a Cash Receipts Journal and Cash Disbursements Book, and register Non-VAT Official Receipts through BIR Form 1906 for every contribution, in cash or in kind.
3. End of candidate registration. A candidate’s registration ends automatically ten (10) days after the deadline for filing BIR Form No. 1601EQ. Registration of political parties and party list groups continues.
4. Withholding and returns. Purchases for campaign expenditures, and purchases intended as campaign contributions, are subject to five percent (5%) Creditable Withholding Tax. Payors submit the Quarterly Alphalist of Payees through eSubmission, and file BIR Form No. 1604-E with the COMELEC-stamped Statement of Contributions and Expenditures on or before March 1 following the year of election.
5. Income tax and Donor’s Tax. Unutilized or excess campaign funds are subject to Income Tax, and expenses not subjected to the 5% CWT are reported as unutilized funds. Contributions reported to COMELEC are exempt from Donor’s Tax only if spent within the COMELEC campaign period, and donations by corporations in violation of Section 36 (9) of the Corporation Code are subject to Donor’s Tax.
6. Statements, records and penalties. Statements of Contributions and Expenditures go to the COMELEC and the RDO within 30 days after the election, and failure to file bars deduction of expenditures. Records are kept at least three (3) years from the close of the election taxable year, and non-compliance carries penalties under RMO No. 7-2015.

Who is affected

• Candidates
• Political parties and party list groups
• Campaign contributors

Deadlines and effectivity

• Statement of Contributions and Expenditures within 30 days after the election
• BIR Form No. 1604-E and Statement on or before March 1 following the year of election
• Candidate registration ends ten (10) days after the BIR Form No. 1601EQ deadline
• Records kept at least three (3) years

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