Some 250 famous social medial (socmed) personalities are now being investigated by the Bureau of Internal Revenue (BIR) for possible tax evasion, the Department of Finance (DOF) said.
In a statement, the DOF said on Thursday, Sept. 16, that the tax bureau is looking into an initial 250 top earning socmed influencers to check if they have been paying their taxes.
BIR Deputy Commissioner Arnel Guballa reported to Finance Secretary Carlos G. Dominguez III that Letters of Authority (LOAs) for the conduct of investigation were already issued to certain socmed influencers found to be “top earners” in their field.
According to the BIR, socmed 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 (RMC) No. 97-2021 issued last Aug. 16.
“We encourage them to register, and then we have the profiling of over 250 personalities. We will do the investigation so that they would pay the necessary corresponding tax on their earnings,” Guballa said in his report to Dominguez.
Under RMC 97-2021 issued last month, socmed influencers should pay income tax and percentage tax or, if applicable, the value-added tax (VAT), as mandated under the National Internal Revenue Code (NIRC) and other existing laws.
Based on the Circular, socmed influencers are defined as those who derive their income from YouTube, sponsored social and blog posts, display advertising, becoming a brand representative, affiliate marketing, among others.
The Circular states, among others, that socmed influencers who receive free goods in exchange for promotions must declare as income the fair market value of these products.
Income treated as royalties from another country, including payments under the YouTube Partner Program, shall likewise be included in the computation of the gross income of the socmed 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 (EOI) provision of the relevant tax treaties,” the bureau said.
“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,” RMC 97-2021 states.
“The social media influencers are, therefore, advised to voluntarily 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 fifty percent (50 percent) of the tax or of the deficiency tax,” it said.