BIR reminds candidates to issue tax receipts for campaign donations, expenses

As the campaign period for those vying national positions in the 2025 mid-term polls officially started, the Bureau of Internal Revenue (BIR) reminded candidates to comply with tax rules concerning their campaign spending as well as contributions received from political supporters.

In an interview with reporters Tuesday following the BIR’s tax compliance verification drive in Quezon City, Internal Revenue Commissioner Romeo Lumagui Jr. said that candidates for both national and local positions have an obligation to “na mag-issue ng mga resibo sa mga mag-donate sa inyo (issue receipts to those who will donate to your campaign kitty).”

“Pangalawa na rin ay mag-withhold sa mga suppliers na gagamitin ninyo kapag may bibiliin kayo, babayad kayo ng mga posters ninyo, yung mga ads ay dapat nag-withhold po tayo para masigurado na bayad ang buwis ng mga suppliers,” Lumagui said.

(Second is to withhold tax for suppliers for your purchases of posters, advertisement materials to ensure that the tax of suppliers are duly paid.)

Section 99 (B) of the National Internal Revenue Code (NIRC) of 1997, as amended, provides that any contribution in cash or in kind to any candidate, political party, or coalition of parties for campaign purposes shall be governed by the Omnibus Election Code.

Meanwhile, Republic Act No. 7166 states that any contribution in cash or in kind to any candidate, political party, or coalition for campaign purposes shall not be subject to the payment of donor’s tax provided that it is duly reported to the Commission on Elections (Comelec).

The BIR, through its Revenue Memorandum Circulars 38-2018, 31-2019, and 22-2022 further clarified that only donations or contributions utilized or spent during the campaign period are exempted from the donor’s tax.

As to election-related expenditures, BIR circulars 38-2018, 31-2019, and 22-2022, provide that income payments made by candidates and parties on their purchases shall be subject to 5% creditable withholding tax.

Covered by withholding tax on campaign-related spending are payments to but not limited to media services, printing jobs, talent/entertainment fees, and rentals of properties.

Lumagui said a candidate who would fail to issue tax receipts on his/her campaign expenditures as well as donations received are in violation of tax and election rules.

The BIR chief said it is up to the Comelec what penalties to impose against tax rules violators during the campaign period.

During the tax compliance verification drive, Lumagui reminded business establishments of their tax responsibilities as well as encouraged them about voluntary compliance.

The BIR’s initiative focuses on helping taxpayers understand their tax obligations, identify common issues, and guide them in correcting these to ensure proper compliance with tax laws.

"The BIR will conduct a tax education campaign, through a nationwide TCVD. The purpose of this TCVD is solely to educate businesses on their tax obligations. No penalties will be imposed" Lumagui said.

The TCVD, which runs from February 10 to 14, 2025, takes an educational and supportive approach.

Instead of imposing penalties, the BIR aims to assist taxpayers by explaining their obligations and how they can comply with tax regulations.

On its first day alone, more than 24,000 establishments across the entire Philippines were visited as part of the drive.

Some of the most common issues found included businesses not being officially registered, not keeping their books of accounts at their place of business, and not displaying their certificate of registration.

Additionally, some taxpayers had not yet converted their official receipts into the required sales or service invoices under the Ease of Paying Taxes (EOPT) Act.

The top five types of establishments visited were retail stores, restaurants, healthcare providers, automotive shops, and construction supply stores.

These businesses received practical advice on how to address their compliance issues and were given time to make the necessary corrections. — RSJ, GMA Integrated News

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