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Unused
campaign contributions to be taxed
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from
NAMFREL Election Monitor Vol.2, No.15
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The Bureau of Internal Revenue (BIR)
issued on June 14 Revenue Regulation No. 7-2011, outlining the
agency's policy on unused campaign contributions. Though the BIR
upholds that campaign contributions are non-taxable since "such
contributions were given not for personal expenditure/enrichment of
the concerned candidate, but for the purpose of utilizing such
contributions for his/her campaign," it makes an exception for
campaign contributions that were unused. |
From Section 2:
"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."
It adds: "Any candidate -- winning or losing -- who fails to
file with the Commission on Elections (Comelec) 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. |
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There was massive spending by candidates
in the May 2010 elections. According to Comelec data, Nacionalista
Party (with Manny Villar as standard-bearer), spent Php 228.7
million, of which Php 80 million were contributions. President
Aquino's Liberal Party spent P158.1 million, with more than a third
coming from contributions, while the then-ruling Lakas-Kampi-CMD
spent Php 130.68 million, all coming from contributions.
Many believe said expenses filed before the Comelec were
underdeclared, to comply with spending caps set by law.
Speaking with BusinessWorld, BIR commissioner Kim Jacinto-Henares
said that though they had to rely on documents provided by Comelec
to enforce the order, the BIR have other means of checking
candidates' campaign funds and expenses. "If the candidates
underdeclare their contributions, their excess funds will come out
in their assets. If they have no way of backing up their assets with
the proper explanations, we can investigate the possibility of tax
evasion," she said.
In a related development, Comelec Law Department head Ferdinand
Rafanan has said that the Commission has already established a
separate campaign finance unit. The Comelec's Law Department --
which is also in charge of investigating election offenses, among
other things – used to be in charge also of monitoring the statement
of expenditures and contributions of candidates.
Read the BIR's policy here:
http://bit.ly/mg6LQ9
(Sources: BIR, BusinessWorld) |
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