BIR: Days of tax-evading social media influencers are numbered
MANILA, Philippines—The next trending “vlog” of your favorite social media influencer may showcase a court hearing or, worse, his or her jail cell if they will not pay their taxes, the Bureau of Internal Revenue (BIR) has warned.
In a text message on Tuesday (Aug. 17), Internal Revenue Deputy Commissioner Arnel Guballa said the BIR was already “in the process of identifying” tax-evading influencers.
The BIR hales into court delinquent taxpayers through its Run After Tax Evaders (Rate) program.
The Tax Reform for Acceleration and Inclusion (TRAIN) law had hiked the fine slapped on those convicted of tax evasion to between P500,000 and P10 million, from P30,000 and P100,000 previously.
Imprisonment will range between six and 10 years, longer than the previous sentence of two to four years.
Internal Revenue Commissioner Caesar Dulay on Monday (Aug. 16) issued Revenue Memorandum Circular (RMC) No. 97-2021, which reminded these influencers — including bloggers as well as video bloggers or “vloggers”—of their tax obligations amid the popularity of social media platforms like Facebook, Instagram, TikTok, Twitter and YouTube, among others, in promoting products and services.
“The BIR has been receiving reports that certain social media influencers have not been paying their income taxes despite earning huge income from the different social media platforms,” said the memo.
“There are also reports that they are not registered with the BIR or are registered under different tax types or line of business but are also not declaring their earnings from social media platforms for tax purposes,” Dulay said.
The BIR chief said influencers, just like other taxpayers who engage in marketing and sales, must pay income tax plus business taxes such as percentage or the 12-percent value-added tax (VAT).
“Social media influencers other than corporations and partnerships are classified for tax purposes as self-employed individuals or persons engaged in trade or business as sole proprietors, and therefore, their income is generally considered business income,” Dulay noted.
“To constitute gains or profits from the conduct of trade or business, the payments must be received by a social media influencer in consideration for services rendered or to be rendered, irrespective of the manner or form of payment,” he said.
“Therefore, if a social media influencer receives free products in exchange for the promotion thereof on his/her/it YouTube channel or other social media accounts, he/she/it must declare the fair market value of such products as income,” Dulay added.
In the case of those affiliated with a foreign firm like Google-owned YouTube, Dulay said “income treated as royalties in another country, including payments under the YouTube partner program, shall likewise be included in the computation of the gross income of the social media influencer and shall be subjected to corporate tax rates.”
Even foreigners needed to shell out taxes for their social media earnings here.
“For resident aliens, any income derived from Philippine-based contents shall generally be taxable. Thus, the burden of proof that the income was derived from sources without the Philippines lies upon the resident alien,” said Dulay.
“Absent such proof, the income will be assumed to have been derived from sources within the Philippines,” Dulay said.
While required to register, file and settle their income and business taxes, Dulay said that just like other taxpayers, influencers can qualify for deductions and avoid double taxation.
“In order to avoid the risks of double taxation, a social media influencer receiving income from a nonresident person residing in a country with which the Philippines has a tax treaty must inform the latter that he/she/it is a resident of the Philippines, and is, therefore, entitled to claim treaty benefits provided under the relevant tax treaty,” Dulay said.
Finance Undersecretary Antonette Tionko told reporters on Tuesday that these social media influencers were being asked to register with the BIR.
Tionko said that once these influencers were registered, the BIR could compute how much in additional tax revenues can be generated from them.
“The other way to do it is to look at their counter-parties, to audit their counter-parties, like the ones that advertise and all that. You can see the match, that’s the way to do it. Hopefully, when they register, we will get a number,” Tionko said.
