THE Bureau of Internal Revenue (BIR) will investigate an initial list of 250 social-media influencers to determine whether they are paying their taxes.
According to the BIR, they issued a “Letter of Authority” to each of these individuals the agency said are “top earners” in their field.
BIR Deputy Commissioner Arnel SD Guballa said they are encouraging these individuals to register with the BIR.
Guballa said in his report to the Department of Finance (DOF) executive committee meeting the BIR is also undertaking “profiling of over 250 personalities.”
“We will do the investigation so that they would pay the necessary corresponding tax on their earnings,” he said in the report.
The sending of letters of authority came after the BIR issued Revenue Memorandum Circular 97-2021 that accused these “influencers” as not paying income taxes despite earning huge sums from different platforms.
Unless exempted in line with the provisions of the National Internal Revenue Code, social-media influencers shall be liable to pay income tax and business tax, which may either be percentage tax or value-added tax (VAT), the BIR said in its circular.
‘Influencer’ defined
BASED on the Circular, “social-media influencers” are defined as those who derive their income from the following sources: “YouTube Partner” program; sponsored social and blog posts; c) display advertising; becoming a brand representative or “ambassador;” affiliate marketing; co-creating product lines; promoting own products; photo and video sales; selling digital courses, subscriptions and e-books; and, podcasts and webinars.
The BIR said the “influencer” who receives free goods in exchange for promotions must also declare as income the fair market value of these products.
Income treated as royalties from another country, including payments under YouTube’s partner program, shall likewise be included in the computation of the gross income of the “influencer” and shall be subject to tax.
“It must be emphasized that the BIR also has the power to obtain information from foreign tax authorities pursuant to the Exchange of Information provision of the relevant tax treaties. The BIR has the means to verify their income as it is clothed with a special power to obtain information from its treaty partners. The BIR may safely rely on the data provided by its treaty partners to establish the influencer’s tax liability,” the circular read.
“The social-media influencers are, therefore, advised to voluntary and truthfully declare their income and pay their corresponding taxes without waiting for a formal investigation to be conducted by the BIR to avoid being liable for tax evasion and for the civil penalty of 50 percent of the tax or of the deficiency tax,” it says.
Double taxation
TO avoid the risks of double taxation, the BIR advised “influencers” receiving income from a non-resident person residing in a country—with which the Philippines has a tax treaty—to inform the latter that they are residents of the Philippines, and are, therefore, entitled to claim treaty benefits provided under the relevant tax agreement.
The circular said “influencers” who “willfully attempt to evade the payment of tax or willfully fail to make a tax return, to supply accurate and correct information or to pay tax” shall, in addition to the payment of taxes and corresponding penalties, be held criminally liable under the Tax Code.
Following the release of the BIR circular, the Creator and Influencer Council of the Philippines had assured the BIR that its members are willing to pay the right taxes, but asked the tax agency to ease the burden of tax compliance by using digital platforms.
For this year, the BIR targets to collect a total of P2.081 trillion.
Preliminary data obtained by the BusinessMirror showed the BIR raked in P1.379 trillion from January to August this year, falling short of its P1.388-trillion goal by 0.65 percent after the Duterte government ordered the lockdown of several areas, including Metro Manila.
However, this is still higher by 5.78 percent compared with the P1.303 trillion that the BIR collected in the same 8-month period in 2020.