Withholding Tax on Political Campaign Contributions/Expenditures

It’s election coming once again!  Politicians as well as their parties are preparing for the near approaching May 2013 Election and are raising and disbursing campaign funds.  The question is, what does the Philippine tax law says about these campaign expenditures and campaign contributions?  What accountants of these political parties and individuals and juridical persons need to remember for the tax side?

Revenue Regulations (RR) No. 8-2009 was issued dated October 22, 2009, with the following subject — “Amending Further Secs. 2.57.2 and 2.57.3 of  Revenue  Regulations No. 2-98, as amended, Subjecting to Creditable Withholding Tax the Income Payments Made by Political  Parties and Candidates of Local and National Elections of All Their Campaign Expenditures and Income Payments Made by an Individual or Juridical Person Forming Part of Their Campaign Contributions to Candidates of Local and National Elections and to Political Parties“.

Here is the gist of RR  No. 8-2009:

  1. Income payments made by political parties and candidates of local and national elections of all their campaign expenditures5% creditable withholding tax, withheld by the party or candidate.
  2. Income payments made by  individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates – 5% creditable withholding tax, withheld by the individual or juridical person.
  3. All individuals, juridical persons and political parties, with respect to their income payments made as campaign expenditures and/or purchase of goods and services intended as campaign contributions, are required to deduct and withhold (withholding agents)

RR No. 8-2009 is effective 15 days following publication in a newspaper of general circulation.  This was published on October 27, 2009, thus effective November 11, 2009.


Below is the full text of Revenue Regulations No. 8-2009:


SECTION 1. OBJECTIVE – It is anticipated that candidates for electoral offices in the national and local elections, their political parties and political supporters will incur substantial campaign expenditures.  The candidates have the civic duty of assisting in nation building which can be attained with them being involved in complying with their tax obligations.  These regulations are promulgated to ensure that the purchases of goods and services for the campaign and election activities of the candidates and their contributors and supporters shall be subject to withholding of tax.

SECTION 2. AMENDMENTS TO SECTION 2.57.2 OF REVENUE REGULATIONS NO. 2-98, AS AMENDED. – Sec. 2.57.2 of Revenue Regulations No. 2-98, as amended, is hereby further amended, to read as follows:

“Sec.2.57.2 Income payments subject to creditable tax and rates prescribed thereon. – Except as herein otherwise provided, there shall be withheld a creditable income tax at the rates herein specified for each class of payee from the following items of income payments to persons residing in the Philippines:

xxx                   xxx                   xxx

“ (W) Income payments made by political parties and candidates of local and national elections of all their campaign expenditures, and income payments made by  individuals or juridical persons for their purchases of goods and services intended to be given as campaign contribution to political parties and candidates – Five percent (5%).”

SECTION 3. AMENDMENTS TO SECTION 2.57.3 OF REVENUE REGULATIONS NO. 2-98, AS AMENDED. – Sec. 2.57.3 of Revenue Regulations No. 2-98, as amended, is hereby further amended, to read as follows:

“Sec.2.57.3 Persons required to deduct and withhold – The following persons are hereby constituted as withholding agents for purposes of the creditable tax required to be withheld on income payments enumerated in Section 2.57.2:

xxx                   xxx                   xxx

“(D) All individuals, juridical persons and political parties, with respect to their income payments made as campaign expenditures and/or purchase of goods and services intended as campaign contributions.

SECTION 4. REPEALING CLAUSE. – The provisions of any revenue regulations, revenue memorandum orders or circulars or any other revenue issuance inconsistent herewith are hereby repealed, amended, or modified accordingly.

SECTION 5. EFFECTIVITY CLAUSE. – These Regulations shall take effect fifteen (15) days following publication in a newspaper of general circulation.

(Original Signed)
MARGARITO B. TEVES
Secretary of Finance

Recommending Approval:

(Original Signed)
SIXTO S. ESQUIVIAS IV
Commissioner of Internal Revenue (362)


Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact support@philcpa.org for more information and if you want to avail professional services. Find us on Facebook!


Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

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