THE Bureau of Internal Revenue (BIR) is in the final stage of crafting an agreement with the Commission on Elections (Comelec) that will, among others, compel candidates to be transparent in their transactions during the campaign period for next year’s national elections.

BIR Deputy Commissioner Nelson Aspe said they are still in discussions with the Comelec on how to go about the deal, but offhand the country’s tax agency is seen to earn an additional P1.4 billion from the campaign transactions.

These transactions may range from as small as honorarium for the temporary staff members to be hired during the campaign period; to rentals; to as big as purchases or printing of campaign materials.

“It [the agreement between the BIR and the Comelec] will be signed perhaps within the year,” Aspe said.

All BIR offices throughout the Philippines will be conducting briefings among all candidates running for elective positions to educate them on their tax-compliance responsibilities, the BIR earlier said.

Under the BIR’s Revenue Regulations 8-09, the government now requires all political candidates, parties and their contributors to remit 5-percent withholding tax to the government on their campaign expenditures and contributions.

The new regulation also requires all political candidates and parties to register with the BIR as a withholding agent, according to Revenue Commissioner Sixto Esquivias IV.

“Candidates have a civic duty of assisting in nation-building, which can be attained with them being involved in complying with their tax obligations,” Esquivias said.

Under the new regulation, candidates, political parties and contributors will have to submit their withholding tax through BIR Form 1601E, issue the corresponding BIR Certificate 2307, and also issue official receipts from their supplier of goods and services.

Expanded withholding tax is a kind of withholding tax which is prescribed only for certain taxpayers, and is creditable against the income tax due of the payee for the taxable quarter or year.

Most companies should remit the amount due to the government on a monthly basis, and there are corresponding penalties for failure to do so.

A BIR official, however, said such scheme may only apply to those candidates or parties that are willing to be transparent in their expenses.

Many candidates, he said, are still expected to employ campaign measures disallowed by law, such as giving money to voters in exchange for cash or goods. Such practices are rampant not only in the provinces but also in Metro Manila. 

“If at the end of the day, his or her (the candidate’s) net worth increased as a result of the campaign funds not being spent, then we can collect from him but from income tax and not from the campaign itself,” the official said.