Campaign Donation's Tax

Someone asked me, "I have a friend who...

is being asked to donate money to the campaign of this Mayor. He does not want to pay the tax because he does he want his name to appear in the list of donors. Is that possible?"

My answer is there is no such thing as a campaign contribution tax. Revenue Regulation 8-09 ftp://ftp.bir.gov.ph/webadmin1/pdf/47698rr%20no.%208-2009.pdf provides for a 5% withholding tax, not on the donations, but on the expenditures. This is similar to the withholding tax that customers withhold from suppliers everytime they pay.

Apparently there was a misinformation during the information dissemination stage. It is the candidate who would be required to withhold from his suppliers.

For example, I donate 100,000 to a candidate. I will not be liable for any tax. Neither would the candidate be required to withhold tax in my name. Later if the candidate then places a TV ad on GMA7 for 100,000, the candidate shall pay GMA7 only 95,000 pesos, and submit the 5,000 (equivalent to 5%) to the BIR as withholding tax in favor of GMA7. GMA7 can use the 5,000 withholding tax certificate to pay for its own tax liabilities.