Candidates, political parties to pay tax on contributions

Starting next year, individuals running for public office, their political parties, and contributors will be required to pay a five percent tax on all campaign funds received and spent for the 2010 elections. The same entities will also be required to issue official receipts for goods and services suppliers on campaign activities, the Bureau of Internal Revenue’s newly-issued Revenue Regulation 8-09 said. All candidates, political parties, contributors will also need to register with the BIR as withholding agents, allowing them to deduct any tax under the law. The new regulation is part of the bureau’s efforts to “maximize tax collections arising from campaign expenditures and contributions," the bureau said in a statement. They must comply with all their tax obligations, including remitting their expanded withholding tax, BIR Commissioner Sixto Esquivias IV said in a statement. A memorandum of agreement between the BIR and the Commission on Elections are currently being formulated to enable the tax body’s new regulation, senior deputy commissioner Joel Tan-Torres said in a statement. BIR offices throughout the country “will be briefing all candidates running for elective positions to educate them on their tax compliance responsibilities," Tan-Torres said. The BIR, the Philippines’ largest revenue source, has failed to meet collection targets after the global meltdown discouraged economic activity, resulting in fewer transactions on which to impose a tax. From January to September this year, the BIR collected only P557 billion, P39.2 billion lower than its revenue target for the period. As a result, lower revenues contributed to the Philippines’ wider deficit which reached P237.5 billion as of the same period. - GMANews.TV