[Ask the Tax Whiz] How do we hold our government officials accountable?

Is the filing of statement of assets, liabilities and net worth mandatory for all government officials and employees? What about newly elected officials? What is the deadline for submitting SALNs? What must be disclosed in the SALN? Penalties for non-compliance?

Pursuant to Section 8 of Republic Act (RA) No. 6713, officers and employees are required to perform and submit affidavits of their SALNs and disclosure of business interests and relationships. financial resources, as well as those of their spouses and unmarried children. under 18 living in their household.

Newly elected public officials are also required to file their SALN along with a declaration of business interests and financial relationships within 30 days of their date of taking office by providing the following information:

  1. property, its improvements, acquisition costs, assessed value and current fair market value
  2. personal property and cost of acquisition
  3. all other assets such as investments, cash on hand or in the bank, stocks, bonds, etc.
  4. Passives
  5. all business interests and financial relationships

All public servants and employees must also execute, within 30 days from the date of taking office, the necessary authorization in favor of the Ombudsman to obtain from all appropriate government agencies, including the Bureau of Internal Revenue (BIR), documents such as can show their assets, liabilities, net worth, as well as their business interests and financial relationships in previous years, including, if possible, the year in which they assumed for the first time a government post.

Their SALN and Disclosure of Business Interests and Financial Connections must be filed by April 30 of each year thereafter. Violation of Section 8 or failure to file the SALN or dishonesty in doing so shall be punishable by imprisonment for a term not exceeding five years or a fine not exceeding 5,000 pesos, or the two, and, at the discretion of the competent court, disqualification from holding public office. Where warranted, it may also result in the confiscation of ill-gotten or unexplained assets.

What is the legal basis for requiring candidates and parties to submit a “full, truthful and detailed” statement of contributions and expenditures? If the candidate or political party did not receive any contribution or did not win the election, will they still have to file their SOCE? Will failure to file their SOCE result in perpetual disqualification?

While Section 107 of the Omnibus Electoral Code was repealed by Section 39 of RA 7166, Section 14 of RA 7166 still requires the filing of SOCE. It stipulates: “Any candidate and treasurer of the political party must, within thirty (30) days following the day of the election, deposit in duplicate at the offices of the Commission the complete, faithful and detailed statement of all the contributions and expenses related to with the elections. »

Regardless of the election results or even if the candidates or parties concerned have received no contributions or incurred any expenditure, they should always submit their SOCEs reflecting this fact.

Failure to file SOCEs may result in perpetual disqualification. According to Section 14 of RA 7166, “For the commission of a second or subsequent offense under this section, the administrative fine shall be two thousand pesos (P2,000) to sixty thousand pesos (P60,000), at the discretion of the Commission. In addition, the offender shall be subject to a life ban from holding public office.”

Are there prohibited contributions such as those from foreigners or foreign companies? Is there a limit to how much politicians can spend during the campaign? Are these grounds for disqualification?

Foreigners and foreign corporations cannot make contributions. According to Article 95 of the omnibus electoral code, “no contribution for the purpose of partisan political activity shall be made directly or indirectly by any of the following”:

  1. Public or private financial institutions
  2. Natural and legal persons operating a public service or owning or exploiting the nation’s natural resources
  3. Natural and legal persons who hold contracts or subcontracts to supply the government or any of its divisions, subdivisions or administrations
  4. Individuals and corporations who have been granted franchises, inducements, exemptions, awards, or similar privileges or concessions by the government or any of its divisions, subdivisions, or instruments, including government-owned or controlled corporations
  5. Natural and legal persons who, in the year preceding the date of the election, have obtained loans or other accommodation of more than 100,000 pesos by the government or any of the divisions, subdivisions or entities, including government-owned or controlled corporations
  6. Educational institutions that have received government grants or funds amounting to at least P100,000
  7. Civil servants or employees of the public service or members of the Armed Forces of the Philippines
  8. Foreigners and foreign companies

There are limits on campaign spending. Under Section 13 of RA 7166, presidential and vice-presidential candidates can spend up to P10 per registered voter, while political parties and independent candidates can spend up to P5 per registered voter. Local and other candidates can spend 3P for each registered voter in the constituency where they filed their nomination papers. Beyond the limit of campaign expenses and those not duly declared in their SOCE, they will be subject to a donation tax of 6%.

According to Article 264 of the General Electoral Code, anyone found guilty of an electoral offense shall be punished by imprisonment for not less than one year but not more than six years and shall not be subject to probation. . In addition, the culprit is disqualified from exercising public functions and deprived of the right to vote.

What are the tax obligations of politicians and/or political parties and groups of parties? Is tax clearance required of politicians and/or political parties and party groups to ensure they have all complied and paid their taxes? Is it true that a conviction for a tax offense is grounds for perpetual exclusion?

As reiterated in Revenue Memorandum Circular No. 22-2022, all political parties, party groups and campaign contributors are required to register with the BIR, issue official receipts and withhold taxes in accordance to Revenue Regulation No. 8-2009, as amended by RR 7-2011 and other related revenue publications.

Here are their tax obligations:

  1. Unused/surplus campaign funds, as well as donations used prior to the campaign period are subject to income tax
  2. Campaign donations/contributions that have been used/spent prior to the campaign period will be subject to a 6% donation tax.
  3. Donations made by companies in violation of Article 36 (9) of the Companies Code are subject to a 6% tax on donors and cannot be deducted as political contributions from the donor/company. society.
  4. Income payments made by political candidates and political parties/groups of party lists on their purchases of goods and services as campaign expenses are subject to a creditable 5% withholding tax in accordance with RR 11- 2018.
  5. Income payments made by individuals or corporations for their purchases of goods and services to be given as campaign contributions to political parties and candidates are subject to a 5% withholding tax under RR 11 -2018.
  6. The following are considered among those covered by the extended withholding tax, but not limited to, payments for: (a) media services, (b) printing work, (c) entertainers/entertainment fees, (d) rentals of real estate and personal property/i.e.
  7. Expenses that have not been subject to the 5% CWT are not considered campaign funds used to claim those expenses as deductions, and will be subject to income tax as initialized campaign funds .

Tax clearance is not required. However, candidates and treasurers of political parties and party groups are required to submit their SOCE to the BIR through the tax district office where they are registered within 30 days of the election.

Being convicted of a tax offense can result in perpetual disqualification. Under Section 253(c), “If he is a public official or employee, the maximum penalty provided for the offense shall be imposed and, in addition, he shall be removed from public office and disqualified for life from exercising any public office, to vote and to participate in any election. – Rappler.com

Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB working group. With the TaxWhizPH mobile app as his brainchild, he was recognized as one of the most outstanding young people in the world, a young CEO in Asia, and one of the ten most outstanding young men in the Philippines due to his advocacy and expertise in tax matters. Currently, he is the President and CEO of the Asian Consulting Group and a Trustee of the Center for Strategic Reforms of the Philippines – the advocacy partner of the Bureau of Internal Revenue, Department of Trade and Industry, and Anti-Red Tape Authority on ease of doing business and tax reform. Visit www.acg.ph for more information or email him at [email protected] and download the free TaxWhizPH app if you have any tax questions.

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