Tax Articles

Comply with Election Requirements

By: Atty. Jomel N. Manaig

Atty. Jomel N. Manaig Partner   +632 8403-2001 loc. 140 This email address is being protected from spambots. You need JavaScript enabled to view it. View Profile

After several postponements, the Barangay and Sangguniang Kabataan Elections (BSKE) finally made it to the stage. The last BSKE that we had was in May 2018. After more than five (5) years, BSKE candidates came out swinging, dancing, and even singing. Personally, the flair and fervor I see in this year’s BSKEs seem to be at the same level as the regular local elections.

Hopefully, the zeal of the BSKE candidates do not fizzle out once the ballots are cast. Our candidates should remember that, whether they win the popular vote or not, they have administrative obligations they are expected to comply with.

The BIR is never remiss in reminding our candidates what they should do to comply with the Bureau’s regulations. Let’s take a look at some of these administrative obligations:

First, BSKE candidates are required to withhold five percent (5%) creditable withholding tax on income payments made pursuant to purchases of goods and/or services related to campaign expenditures. Such requirement to withhold is likewise applicable to individuals or juridical persons for their purchases of goods and/or services intended to be given as campaign contributions.

Failure to comply with these withholding requirements may result in an assessment for deficiency withholding tax obligations in addition to the imposition of interest and penalties.

Second, all candidates must maintain a record of contributions, donations, and expenditures, which will be used for the Statement of Contributions and Expenditures (SOCE) to be submitted to COMELEC. This record is essential since it will be the basis for the preparation of the SOCE.

Many a candidate have met legal hurdles or have had their political careers tarnished because of non-compliance or deficiencies with the SOCE requirement. Compliance with the record and SOCE requirements may be the thin line between having an exemplary public service or becoming a cautionary tale.

Third, the requirement of issuing receipts is never out of fashion. All candidates receiving donations and campaign contributions must issue the corresponding Non-VAT BIR Printed Receipts for each and every contribution received, either in cash or in kind. This, however, presupposes that the candidate purchased Non-VAT BIR Printed Receipts from the Revenue District Office where they are registered.

In line with this requirement, for donations and campaign contributions received in kind, the fair market value shall be considered as the value of such donation and/or campaign contribution for tax purposes.

Candidates should also bear in mind that non-compliance with the requirements of the BIR comes with the pain of penalties.

These obligations are just some of the requirements that are incumbent of our aspiring public officials. I bet that you know at least one person that ran for a Barangay or Sangguniang Kabataan post. Do them a favor and ask them “Have you already complied with your reportorial and compliance obligations?” Hopefully, all their talk of wanting a better community starts with them complying with the rules.