DOF orders BIR to create unit to monitor digital transactions


FINANCE Secretary Carlos Dominguez III ordered the Bureau of Internal Revenue (BIR) to set up a unit to track the selling of goods online as well as to coordinate with other countries to determine how to properly tax these digital transactions.

Following his discussion with the BIR’s National Investigation Division, BIR Commissioner Caesar Dulay said this will be done initially through a task force that will monitor the online selling of goods and services, which has surged amid the Covid-19 pandemic.

Dominguez suggested that the BIR consult with their counterparts in Russia or Korea on ways to effectively tax digital transactions.

“We have to catch up with these guys,” Dominguez said during a recent Department of Finance (DOF) executive committee meeting, referring to the online sellers.

Last year, the BIR clarified that those earning an annual net income of less than 250,000 will not be subject to tax and that those who are required to register with BIR are people who are “habitually” engaged in the online selling business.

Apart from online sellers, BIR is also keeping tabs on the tax compliance of social-media “influencers” in the country.

As of September 15, BIR counted 2,282 online retailers and service providers, as well as 105 individuals and content creators that have registered with them.

The government’s main collection agency earlier said it will investigate an initial list of 250 “influencers” to check if they have been paying their taxes.

The BIR said Letters of Authority for the conduct of investigation were already issued to certain social-media influencers found to be “top earners” in their field.

According to the BIR, social-media influencers who earn money from their posts on digital media are classified as self-employed individuals or persons engaged in trade or business as sole proprietors. Their earnings are generally considered as business income, as defined under BIR’s Revenue Memorandum Circular 97-2021 issued last August 16.

The BIR said social-media influencers should pay income tax and percentage tax or, if applicable, the value-added tax (VAT), as mandated under the National Internal Revenue Code and other existing laws.

Based on the Circular, social-media influencers are defined as those who derive their income from the following sources: a) YouTube Partner Program; b) sponsored social and blog posts; c) display advertising; d) becoming a brand representative/ambassador; e) affiliate marketing; f) co-creating product lines; g) promoting own products; h) photo and video sales; i) digital courses, subscriptions, e-books; and j) podcasts and webinars.

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