The Bureau of Internal Revenue (BIR) would dig deep into the world of marketing to unearth social media influencers who are earning huge income without paying taxes, the Department of Finance (DOF) said.
Finance Undersecretary Antonette C. Tionko said Tuesday, August 17, that the issuance of the BIR circular reminding social media influencers of their tax obligations is just the beginning of several regulations aimed at online content creators.
BIR Commissioner Caesar R. Dulay last Monday, August 16 issued memorandum circular 97-2021 that amplified the tax obligations of social media influencers and the possible consequences for not paying them.
Dulay disclosed that the tax bureau “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.”
“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.
For this reason, Dulay believes "it is now the most opportune time to discuss the tax obligations of these social media influencers.”
Tionko, who heads the DOF’s Revenue Operations Group, supported Dulay’s move to run after people who are using their considerable social media footprints to generate income through YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, and Snapchat.
“BIR recently issued a RMC on influencers requiring them to register and pay their taxes. That’s one of the measures we are adopting because that’s the sector that I don’t know if they pay tax,” Tionko said.
The initial phase of the BIR regulations on social media influencers, Tionko said is to require them to register with the taxman to ensure tax compliance.
The finance official also said the BIR will scrutinize the businesses that are utilizing influencer social media marketing.
“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,” Tionko said.
However, Tionko disclosed that there is no way yet to estimate how big is the tax leakage from social media influencers.
“Hopefully, when they register, we will get a number,” Toinko said.
According to the BIR, social media influencers—classified as self-employed persons engaged in trade or business as sole proprietors—are liable for income tax and percentage or value added tax.
Moreover, online content creators are also liable for business tax.
"Self-employed individuals whose gross sales or gross receipts and other non-operating income do not exceed the VAT threshold of P3,000,000 shall have the option to avail of the 8% tax on gross sales or gross receipts and other non-operating income," BIR said.
But the tax bureau also clarified that social media influencers are allowed to deduct all ordinary and necessary expenses paid during the taxable year, like development, management, operation and conduct of the trade, business or exercise of profession.