Philippines To Enforce Election Campaign Tax

by Mary Swire, Tax-News.com, Hong Kong

11 January 2010

It has been confirmed by the Philippines’ government that the Bureau of Internal Revenue (BIR) has been authorzsed to collect a 5% withholding tax from the campaign expenditure of all political candidates and parties in the forthcoming May elections.

The BIR is waiting for the release, expected this month, of the final list of local and national candidates in the elections. Its Commissioner, Joel Tan-Torres, has said that the BIR will, thereafter, begin to distribute all the necessary forms and materials for payment of the withholding tax.

All political candidates, parties and contributors were requested, last year, to register with the BIR with regard to the remittance of the tax. They will be expected to comply with all of their new obligations under the relevant tax regulations, including the provision of official receipts from the suppliers of goods and services for their campaign activities.

The new tax is not a levy on contributions. All contributions in cash or in kind to any candidate or political party for campaign purposes will remain free of tax.

The BIR missed its 2009 tax revenue targets, largely because of the economic downturn. However, Joel Tan-Torres, in a recent memorandum, has now said that it should be able meet its 2010 objectives, partly from improvements to tax administration, but also due to tax-increasing measures planned for implementation this year, including the new campaign tax.

Also partly due to the decreased revenues during the year, the Philippine government saw its projected budget deficit in 2009 increase way beyond its original estimates of PHP250bn (USD5.5bn) to up to PHP300bn.

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