BIR reminds candidates to report campaign expenses

MANILA, Philippines - Candidates in the last elections were reminded yesterday to report all their campaign disbursements to the Bureau of Internal Revenue (BIR) and pay income taxes for excess funding they received during the election period.

Under Revenue Regulation 7-2011, the tax bureau clarified that all unspent election contributions and donations will be recorded under a candidate’s personal income and will thus be subject to five percent creditable withholding tax.

“I would like to appeal to the candidates, since we are all after the welfare of this country, I hope that they would comply with the rules,” BIR Commissioner Kim Jacinto-Henares told reporters in a briefing.

The report should be submitted 30 days after the polls, similar to the requirement of the Commission on Elections (Comelec), Henares said.

Thus, candidates have until June 13 to meet the requirements for this election.

“There will be no sacred cows. Winning or losing (candidates) will have to report,” she added.

In response, United Nationalist Alliance (UNA) spokesman Navotas Rep. Toby Tiangco, in a text message, said the party’s candidates would definitely comply with the BIR order.

Marikina Rep. Miro Quimbo, spokesman for the administration coalition Team PNoy, did not reply to a text query from The STAR.

Henares said candidates would have to submit separate reports detailing their campaign distributions and expenditures to the BIR and the Comelec.

The BIR could then compare the two, she said, to check if there is any discrepancy that would warrant further investigation to determine if a tax evasion case could be filed.

“After looking at that, if there is something that is out of the ordinary, then we will pursue further investigation,” Henares said, pointing out that a letter of authority could be sent to an erring candidate to start the probe.

“The BIR is not a political agency. It’s a tax administration office and we enforce the tax laws. Everything will be based on documentary evidence,” she added.

Any election-related case that might be filed will be known in the second half of the year, Henares said, but was quick to point out that she expects a “high compliance rate” from the candidates.

During the past elections, the BIR chief admitted that few candidates were paying attention to this rule despite it being part of the law. This was the reason why the agency decided to issue the resolution when she took over.

In the presidential elections in 2010, President Aquino recorded a campaign fund surplus of P37 million, which Malacañang said was paid with correct income tax and later returned to the donors.

“For as long as everyone follows (the rule), then there should be no problem,” Henares said.

Tax evasion cases

Also yesterday, the BIR filed two tax evasion cases against a sports car buyer and a packaging company before the Department of Justice under its Run After Tax Evaders (RATE) program.

The bureau sued Napoleon Villapando for violating Sections 51 and 74 of the National Internal Revenue Code (NIRC) when he failed to file income tax returns for years 1999 to 2002 and 2005.

Villapando, who is earning purely compensation income, was also found to have not reported other income sources that allowed him to acquire a two-door Lamborghini Coupe Sports car worth P20 million in 2007.

The respondent only reported an income of P718,575.78 during that year.

“The tax records of Villapando showed that he has no financial capacity to acquire said vehicle,” the BIR said in a statement.

The agency is asking Villapando to pay P15.84 million, inclusive of surcharges and interests, for taxable year 2007.

Meanwhile, Megapack Container Corp. was also charged with violation of the NIRC, this time for “failing to supply correct and accurate information” of its value-added tax payments “despite numerous notices.”

The BIR is asking the company to pay P398.97-million tax deficiency, inclusive of surcharge and interest, for 2009 and 2010, the statement said.

The cases are the 165th and the 166th under the RATE program that began in July 2010.