I was browsing through the envelopes in my mailbox when I found an unsolicited letter that had been sitting there for some time. I wondered how the sender got my home address. It turned out to be a greeting from a city councilor. It did not look like the usual political ad, but the name and message of the sender remained in my mind. Indeed, some politicians have been preparing for the elections and reaching out to potential voters even before the campaign period began. Apart from the actual elections, one of the important things that they should have in mind are the tax aspects of campaign contributions.

Recently, the Bureau of Internal Revenue (BIR) issued RMC 16-2025 to remind candidates and everyone else participating in the May 12 elections of their tax obligations.

As a rule, campaign expenditures of political parties and candidates in local and national elections are subject to 5% creditable withholding tax (CWT). Likewise, purchases made by individuals or juridical persons intended to be given as campaign contribution to political parties and candidates are subject to 5% CWT. The withholding tax system helps our government ensure that election-related income is taxed and provides a way to monitor the reporting of these transactions.

On the part of the candidates, political parties, or party-list groups, the accurate withholding of taxes is crucial since only the expenses that were subjected to the 5% CWT can be considered as utilized campaign funds. Otherwise, if the CWT is not withheld and remitted, the corresponding expense shall be treated as unutilized campaign funds.

Aside from withholding taxes, any candidate, political party, or party-list group, win or lose, is required to file with the Commission on Elections (Comelec) a Statement of Contributions and Expenditures as provided under the Omnibus Election Code. Without this, they may not claim their expenses as deductions from the campaign contributions.

Ultimately, any unutilized or excess campaign funds after deducting the allowable campaign expenditures is subject to income tax. Thus, there is a real economic consequence for candidates if CWT is not withheld and if the expenses are not reported to the Comelec. No further deduction, either itemized or optional, may be made against such taxable income. Compliance is therefore critical.

Considering such a hefty price of not complying with the requirements or conditions of deductibility of campaign expenditures, candidates should be mindful of the following registration and reporting requirements.

First, all candidates receiving donations or spending for their campaign have the duty to register or update their registration with the BIR. Further, those receiving donations and campaign contributions must secure a Non-VAT BIR Printed invoice purchased from the Revenue District Office (RDO) where they are registered. The invoice shall be issued for every contribution (whether in cash or kind).

Second, all political parties or party-list groups and candidates must comply with the tax return filing and remittance requirements. This includes the following:

1.   Monthly remittance of CWT using BIR Form No. 0619-E on or before the 10^th day of the month after the tax was withheld;

2.   Filing and payment of the quarterly withholding tax return (BIR Form No. 1601-EQ) on or before the last day of the month after the end of the quarter after the tax was withheld. This must include the Quarterly Alphalist of Payees (QAP);

3.   Filing the Annual Information Return of CWT (BIR Form No. 1604-E) as well as the Statement of Contributions and Expenditures duly stamped “Received” by the Comelec on or before March 1, 2026; and

4. Reporting any unutilized/excess campaign funds as taxable income.

Third, political parties and party-list groups are expected to keep adequate books and other accounting records such as a Cash Receipts Journal and a Cash Disbursements Book as the basis for the Statement of Contributions and the Statement of Expenditures for submission to the Comelec. On the other hand, individual candidates may opt to use a simplified set of bookkeeping records if it can provide accurate information. The records of contributions and expenditures, together with all pertinent documents, must be preserved for a period of three years from the close of the taxable year during which the election was held (or until Dec. 31, 2028 for the 2025 elections).

Finally, every candidate and Treasurer of the political parties or party-list groups must submit the Statement of Contributions and Expenditures to Comelec and the RDO where the candidates, political parties or party-list groups are registered within 30 days after the election.

Incidentally, after the elections, the registration of individuals in their capacity as candidates shall automatically end 10 days after the deadline of filing the quarterly withholding tax return, so they need not apply for cancellation or update of their registration with the BIR. However, the political parties’ registration including party-list groups shall remain intact, unless they opt to have this updated.

On the part of the contributors, only those donations or contributions that have been utilized or spent during the campaign period as set by the Comelec are exempt from donor’s tax. Donations utilized before or after the campaign period are subject to donor’s tax and not deductible as political contributions on the part of the donor. Thus, for supporters, it’s also important to monitor the contributions and see that these are duly spent and accounted for. If not, they may be subject to taxes as well.

The election season is now in full swing, and once again, I am reminded of the power of the electorate to decide on how we want to move forward as one country in the coming years. We must never forget our civic responsibilities and obligations, candidates or voters alike, to contribute to a successful election and help protect, if not advance, the democracy that we have today.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

Delila Dayag is an assistant manager at the Tax Services department of Isla Lipana & Co., the Philippine member firm of the PwC network.

delila.l.dayag@pwc.com