MANILA, Philippines - The Bureau of Internal Revenue (BIR) has warned candidates for May 2013 elections that they may face sanctions including jail time and fines of up to P50,000 if they fail to submit receipts of donation and expenses incurred during the campaign period.
BIR Commissioner Kim Henares says all donations, whether in kind or in cash, must have a receipt. Cash donations used in purchasing election paraphernalia or airtime or any other expenses related to the election must have a 5% withholding tax to be later remitted to the BIR.
According to Henares, after the elections, a candidate has 3 choices:
1. Return the excess amount to the donor complete with receipt and acknowledgment of the donor;
2. Donate the excess amount to charity or foundation in which case a receipt of acknowledgment is also needed; and
3. Keep the excess amount but pay the corresponding income tax.
Henares clarifies that there is no limit on the amount of donation, but there is a limit on the campaign expenses.
The BIR has also warned foundations for paying some of the expenses of the candidates, since there is also a limit on the foundations' tax exemption privilege.
According to Henares, if the candidate refuses to submit the documents, it will be subpoenaed by the BIR.
Once the tax bureau finds out violations of the tax code, Henares says this translates to a criminal case where the penalty may be a fine of a P1,000 to P50,000 and jail time of 2 to 4 years.
The BIR has also cautioned donors to make sure they can justify their donation through their income.
Henares says for instance a donor who gives P1 million must be able to prove paying at least P500,000 to justify such kind of income.
But Henares said the BIR will take its cue from the Comelec in terms of who's going to be investigated since the directive is really in support of the Comelec's drive for clean and honest elections.