BIR issues campaign tax guidelines

MANILA, Philippines - The Bureau of Internal Revenue (BIR) issued yesterday the guidelines on the five-percent withholding tax on campaign expenditures that will soon be imposed despite opposition from poll candidates and political parties.

BIR officer-in-charge Joel Tan-Torres issued Revenue Memorandum Order 35-2009 laying down the policies and procedures of “Project: Iboto Mo” under Revenue Regulation 8-2009.

Tan-Torres said political parties, candidates for local and national posts as well as campaign contributors should register with the BIR as withholding agents in compliance with existing withholding tax laws.

He said revenue district offices (RDOs) were ordered to ensure that all political parties, candidates of local and national elections and campaign contributors are registered within their respective jurisdictions.

The RDOs are also required to coordinate with the offices of the Commission on Elections (Comelec) to ensure that the BIR would be able to issue Applications of Registration to all candidates when they apply for their certificate of candidacy (COC) from Nov. 20 to Dec. 1.

The BIR would also get from the Comelec the list of names and addresses of the candidates that filed their COCs and the accredited political parties and match them with the BIR registration system to determine if they are registered with the bureau.

Tan-Torres said the BIR would also get from the Comelec the Statement of Campaign Expenditures and Contributions submitted by all candidates and political parties and conduct a pre-audit to determine their compliance with the withholding tax obligations.

The BIR would then send letters or notices to all covered parties who failed to, or were late or were deficient in the filing and remittance of withholding taxes.

The withholding agents are also required to submit the monthly report on “Project: Iboto Mo” to BIR regional directors starting next month up to Aug. 10 next year.

The BIR hopes to collect at least P1.4 billion from the planned imposition of the five-percent withholding tax on campaign contributions despite strong opposition from candidates and political parties.

Opposition candidates led by Makati Mayor Jejomar Binay, who is running for vice president under the banner of former President Joseph Estrada, said the BIR order would be used to harass and intimidate the financial supporters of candidates.

Malacañang dismissed the claim.

The BIR has fallen short of its collection target of P798.5 billion this year, collecting only P557 billion from January to September or P39.2 billion short of the programmed collection of P596.2 billion in the same period last year, resulting in a record deficit of P237.5 billion in the first nine months of the year.

The government sees the deficit hitting a record level of P250 billion or 3.2 percent of gross domestic product (GDP) this year from P68.1 billion or 0.9 percent last year due to the global economic meltdown.