MAJORITY OF the 12 political parties that fielded senatorial candidates in last May’s elections were able to register with the Bureau of Internal Revenue (BIR), but most of them still have a lot of explaining to do with the tax agency.
Ang Kapatiran, Bangon Pilipinas, the Democratic Party of the Philippines (DPP), and Makabayang Koalisyon ng Mamamayan (Makabayan) even failed to fulfill the most basic tax-related requirement for political parties: to register with the BIR.
As pointed out by BIR Commissioner Kim S. Jacinto-Henares, a political party needs to register with the BIR for it to be able to withhold taxes on expenditures, as well as to issue receipts to acknowledge donations.
Donations that Comelec-accredited parties receive during the campaign period, she adds, are automatically tax-exempt, provided that these amounts are used for the elections.
The Statements of Election Contributions and Expenditures (SOCEs) of Makabayan and Bangon Pilipinas showed Taxpayer Identification Numbers (TINs), which should have meant both parties had registered with the BIR.
The TIN that Bangon Pilipinas used in its SOCE, however, belongs to its treasurer, Benjamin Co. Meantime, the TIN appearing in Makabayan’s SOCE is actually that of the party-list organization Bayan Muna, one of the eight groups forming Makabayan. According to Henares, Bayan Muna should thus have been the one accepting donations and issuing receipts since it is the one registered with the Bureau.
Bangon Pilipinas, DPP, and Makabayan all have yet to reply to PCIJ’s queries regarding their tax registration status. In a phone interview with PCIJ last July 5, Rafael Enriquez, treasurer of Ang Kapatiran Party, said that he was not certain if the party had registered with the BIR. He said he had not found any record, which is why he did not put any TIN in the party’s SOCE.
Theoretically, the four parties can still opt for late registration — just like the Laban ng Demokratikong Pilipino (LDP), which registered with the BIR only last June 13. It probably paid P1,000, the penalty fee for late registration. But Henares said LDP will still have a problem in the remittance of the taxes withheld from its expenditures since such taxes should be remitted to the BIR on the next month that the money was spent and the taxes withheld. If LDP fails to remit the taxes it withheld within the time prescribed by law, it will be subjected to the penalties indicated in the National Internal Revenue Code such as Section 248, which imposes a penalty equivalent to 25 percent of the taxes to be paid, and Section 249, which adds an interest rate of 20 percent per annum to the unpaid amount of taxes.
LDP has yet to respond to PCIJ’s inquiry on whether or not it was able to remit its withholding tax on time.
Revenue Memorandum Circular No. 48-2013 stipulates that income payments made by political parties of all their purchase of goods and services as campaign expenditures are subject to a creditable withholding tax (CWT) of five percent. Payments for media services, printing jobs, talent/entertainment fees, rentals of both real and personal property and the like are among those covered by CWT.
Among the 11 political parties that filed their SOCEs with the Commission on Elections (Comelec), two parties — Partido Demokratiko Pilipino-Lakas ng Bayan (PDP Laban) and Social Justice Society (SJS) — did not declare any expenditure. Bangon Pilipinas Party attached a single receipt from ABS-CBN Corporation but the five-percent CWT was not deducted. Akbayan’s only expenditure was its cash donation (P1,590,000) to senatorial candidate Ana Theresia ‘Risa’ Hontiveros.
Only seven parties actually attached expenditure receipts to their SOCEs. Of these seven, only the Liberal Party and the Nacionalista Party indicated five-percent withholding tax deductions in some of their expenditure receipts.
Ang Kapatiran’s Enriquez said his party did not withhold tax on its campaign expenditures or make any remittance to the BIR. He said he will consult with the party officers on what action to take regarding the matter. Ang Kapatiran incurred expenditures and received contributions worth P362,565.54.
Only three of the organizations that filed SOCEs — Nacionalista Party (NP), Nationalist People’s Coalition (NPC), and the opposition coalition United Nationalist Alliance (UNA) — attached BIR documents that showed they remitted the five-percent withholding tax deducted from their payments for the purchase of goods and services within the campaign period.
According to NP’s BIR Form 1601-E, it remitted withholding tax amounting to P5.55 million for the payment of political advertisements and printing jobs for the whole campaign period. NP’s total expenditure was P123.62 million.
UNA’s papers indicated that it had a total CWT remittance of P499,928 for its travel, campaign and research expenditures. UNA’s total expenditure came to P72.36 million.
NPC attached a copy of BIR Form 1601-E for the month of May that showed a CWT remittance amounting to P1.33 million, for the payment of political advertisements. NPC’s total expenditure was P31.65 million.
PCIJ asked the other parties that did not attach tax documents to their SOCEs if they remitted the withheld taxes on time. Only LP responded by sending to PCIJ a copy of bank deposit slips showing that it paid P9.15 million as taxes it withheld from its expenditures.
Incidentally, LP was also among the three parties that wound up with excess donations. LP even had the biggest amount, P671,806.91, followed by UNA with P388,628.56, and NPC, P169,354.22.
Revenue Regulations No. 07-2011 says that “(u)nutilized/excess campaign funds, that is, campaign contributions net of the candidate’s campaign expenditures, shall be considered as subject to income tax, and as such, must be included in the candidate’s taxable income as stated in his/her Income Tax Return (ITR) filed for the subject taxable year.”
Among the three parties, only LP responded to PCIJ’s inquiry regarding what it did with its excess donations. According to LP, it paid the proper amount of income tax for its excess campaign contributions and used the money to finance its post-election expenses.
Documents filed with Comelec show that LP and UNA used their official receipts with authority to print (ATP) from the BIR. NPC, meanwhile, issued acknowledgment receipts only because its official receipts with ATP from the BIR were supposedly still being processed at the time the party submitted its SOCE.
LDP and NP issued temporary BIR receipts. The contributor receipts issued by LDP, however, showed that the donations were received after the May 13, 2013 elections. Henares again notes that LDP will have a problem in the late remittance of taxes withheld.
Ang Kapatiran issued supposedly official receipts without ATP, as did Makabayan. Bangon Pilipinas did not attach a contributor receipt acknowledging its lone donor (Bagong Pilipinas, Bagong Pilipino Movement, Inc.). As such, Bangon Pilipinas might be in violation of Revenue Memorandum Circular No. 15-2013, which requires the treasurer of political parties to issue an official receipt for every contribution received.
Akbayan, PDP Laban, and SJS all said they did not receive any contribution. DPP, meanwhile, did not file a SOCE at all.