MANILA, Philippines — The Bureau of Internal Revenue (BIR) cleared Wednesday President Benigno S. Aquino III of any tax liability in connection with campaign contributions he received in last year’s presidential election.

BIR Commissioner Kim S. Jacinto Henares said the President was prompt in remitting the 5 percent withholding tax due from suppliers of goods and services used to promote his candidacy.

She said the President was not liable to include in his income tax return and pay the tax thereon on the unspent campaign contributions because the donations were returned to their donors.

The BIR chief explained that the President was not subject to Revenue Regulations No. 7-2011 because the money was returned to donors as if he did not received such donations.

The regulations, signed by Finance Secretary Cesar Purisima based on the recommendation of Henares, imposes income tax on excess donations.

What the President remitted to the BIR, she said, was the five percent withholding tax due from suppliers of goods and services, including broadcast and print advertisements, printing of streamers and sample ballots, and other election paraphernalia.

Informed sources said that many winning and losing candidates running for local and national positions in 2010 elections were remiss in remitting to the BIR the five percent withholding tax.

Some lawmakers even questioned the collection of the tax declaring that under the Omnibus Election Code such expenses were exempted from taxation.

The collection of the five percent withholding tax on political expenses was stipulated in Revenue Regulations No. 10-2009 issued by then Finance Secretary Margarito Teves.

In answering the Philippine Center for Investigative Journalism (PCIJ) report on the issue, Malacañang claimed the excess funds were returned to three donors, including former Environment and Natural Resources Secretary Fulgencio Factoran, after deducting and remitting to the BIR the withholding taxes.

Henares said that as a general rule, fund campaign contributions are not included in the taxable income of the candidates to whom they were given because such donations were not for personal enrichment but for their campaign.