BIR requires media firms to detail earnings on political ads

MANILA, Philippines - Media outfits that aired or published election promotion materials are being asked to report to the government their earnings on such activities for the first time on this year's national polls.

"It is a way for us to cross-check if candidates pay the right taxes for these activities or if they are getting donations from the right sources," Bureau of Internal Revenue (BIR) commissioner Kim Henares said by phone.

"This just part of those improvements or reforms that we undertake as you go along because you want to strengthen monitoring," she added.

Under Revenue Memorandum Order 16-2016, BIR is asking media organizations to detail election-related commercials and advertisements by candidates and submit them by May 22.

The report must contain each ad's publication or airing date, duration and exact time of airing, candidate's name, amount paid, and tax identification number of advertising agency.

It will cover all election materials that came out between Nov. 9 last year and May 7, 2016.

Non-submission will result in a P1,000 penalty for each failure and the media firm being included in the priority audit program.

"The concerned RDO (revenue district office) and LTD (Large Taxpayers Division), where the subject media outfits are registered, shall immediately verify...tax appliances and determine assessable donations, if any...," the order stated.

Henares noted that the report will help the BIR track where the candidates are getting their donations.

"For instance, sometimes there are cases when the candidate paid for a particular airtime, but then additional minutes are given to him or her," the BIR chief explained.

"This additional airtime could be anything. It could be donated by a private corporation, which is prohibited," she added.

No consultations were held on the new policy, but Henares is confident media will have the information readily available.

"Actually, what we are asking for is just a detailed report. They are already submitting a summary list of sales and purchases quarterly where these amounts are included," she said.

Under Section 13 of Republic Act 7166, all campaign donations are exempted from donor's tax, but BIR said this is only true for those actually spent by the candidate.

Unused funds are not covered by the exemption and, thus, should be reported as part of the candidate's income to be paid the appropriate levy. 

On the flip side, income from purchase of goods and services using campaign contributions are subject to 5-percent withholding tax.