Bureau of Internal Revenue set to slap 5% campaign tax

MANILA, Philippines - The Bureau of Internal Revenue (BIR) has vowed to strictly enforce the collection of the five percent withholding tax on all political contributions and campaign expenditures of candidates running in the May elections.

The BIR is waiting for the Commission on Elections (Comelec) to release the final list of local and national candidates.

BIR Commissioner Joel Tan-Torres said the agency is not blinking on the controversial election-related withholding tax despite opposition from candidates and political parties.

“The final list of qualified candidates will be released. We are just waiting for that,” Tan-Torres said.

The Comelec already released last month a partial list of candidates including presidential and vice-presidential nominees but it has yet to come out with a complete list of all candidates.

Tan-Torres said once the Comelec comes out with the final list early this month the BIR would immediately deploy poll officials to provide all the candidates with the necessary materials needed for the withholding tax.

He warned the candidates that each name on the Comelec’s final list of candidates would be properly monitored so as not to escape the regulation.

“We will monitor these candidates and provide them the necessary materials,” Tan-Torres said.

Tan-Torres clarified that the withholding tax is necessary and is not a new tax.

The BIR issued last year Revenue Regulation 8-09, which required all political candidates, political parties and contributors to register with the BIR as withholding agents.

It was then BIR Commissioner Sixto Esquivias IV who issued the regulation but Tan-Torres said this would be upheld.

Tan-Torres took over the helm of the BIR in November after Esquivias resigned as BIR commissioner.

Under the regulation, the BIR said all candidates, political parties, and contributors must comply with all their tax obligations including the remittance of their expanded withholding tax.

They should also require the issuance of official receipts from their supplier of goods and services for their campaign activities.

Tan-Torres said the Comelec has committed to support the regulation by ensuring that the candidates, supporters and parties comply with their tax obligations.

The BIR has been looking into other possible sources of revenues amid the government’s widening budget deficit.

BIR officials said the agency has been missing its collection targets because of the global financial crisis, which has dampened economic activities. 

The bureau’s target is to collect roughly P800 billion to P850 billion this year, lower than the initial estimate of P875 billion.

The BIR’s target collection last year was P742 billion, or P56 billion lower than the revised 2009 full-year target of P798 billion.