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[Ask The Tax Whiz] What are the tax compliance requirements for election candidates?

The Philippine Tax Whiz provides tax compliance reminders to all candidates and other participants in any national or local elections, including barangay and Sangguniang Kabataan elections, pursuant to RMC No.97-2023 issued on September 22, 2023

Does the BIR require individual candidates to register and pay a registration fee for national or local elections?

No. BIR registration and payment of registration fees are not required for filing a Certificate of Candidacy for any national or local elections. However, candidates may register with the BIR under Executive Order No. 98 to get a Taxpayer Identification Number (TIN) and shall not be required to pay the annual registration fee.

Yes. Candidates who, in general, have income payments subject to withholding tax such as purchase of goods and/or services for the campaign and election activities, or have received donations and campaign contributions, must register or update their BIR registration with the RDO where the candidate is registered and pay the corresponding registration fee.

What are the required documentation and records to be maintained by the political candidates or contributors in relation to the campaign activities?

All candidates must keep detailed records of contributions, donations, and expenses as crucial for creating the Statement of Contributions (Cash Receipts Journal) and Expenditures (Cash Disbursement Book) required for submission to COMELEC, as mandated by RR No. 8-2009. However, individual candidates may opt to use a simplified set of bookkeeping records as long as they provide accurate information based on RMC No. 31-2019.

Additionally, a Non-VAT BIR Printed Receipt purchased from the RDO where the candidates are registered shall be issued for all cash and in-kind contributions, where in-kind contributions shall be valued at fair market value.

In national and local elections, including Barangay and SK elections, income payments made by candidates or political parties for campaign-related expenses are subject to a 5% creditable withholding tax as per RR No. 11-2018. 

Also, per RMC No. 31-2019, only those donations or contributions that have been spent during the campaign period as set by the COMELEC are exempt from donor’s tax. Unutilized or excess campaign funds, net of the candidate’s or political party’s or party list’s campaign expenditures shall be considered subject to income tax.

If you need more clarity on the tax compliance of candidates for national and local elections you may #AskTheTaxWhiz! Download TaxWhizPH Mobile app and use the unli-chat feature.

Originally published via Rappler.

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