DILIMAN, Quezon City — August 17, 2021 — The Bureau of Internal Revenue (BIR) reminds Internet celebrities and social media influencers in the Philippines to pay their tax dues, as they make money and profit online through sponsorships, advertisements, endorsements, and promotion of products and services to their followers and subscribers.
Memorandum Circular 97-2021, dated August 16, 2021 took note of “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,” it said.
Social media influencers defined by the Bureau includes individuals and corporations getting income in both cash or kind from social media platforms like YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, Snapchat, etc. in exchange for services and activities performed like blogging or video blogging.
Receiving free products in exchange for promotion is required to be declared as income. Other than income tax, “social media influencers are also liable for business tax, which may either be percentage or VAT,” the memo added.
Royalties from other countries shall be included in the computation of the gross income and subjected to “schedular or corporate tax rates.” Foreign influencers living in the Philippines generating Philippine-based content are taxable.
On the other hand, social media influencers are allowed to deduct their “ordinary and necessary expenses paid or incurred during the taxable year in carrying on or which are directly attributable to, the development, management, operation and/or conduct of the trade, business or exercise of a profession.” YouTubers may deduct expenditures like filming, computer equipment, software licensing, Internet and telecommunications, rent and utilities, office supplies, bank charges and shipping costs, etc.
Last year, the Revenue Memorandum Circular 60-2020 explains those who do business and earn through digital transactions and electronic media like e-commerce are taxable.
Social media influencers who willfully attempt to evade or defeat tax will face fines from ₱500,000 to ₱10 million and imprisonment of not less than six years but not more than ten years. Failing to make a return or supply accurate and correct information will be criminally liable, in addition to paying tax and corresponding penalties from ₱10,000 and suffer detention of not less than one year but not more than ten years.
Substantial under-declaration of taxable sales, receipts, or income, or substantial overstatement of deductions constitutes a false and fraudulent return. BIR emphasizes its ability to obtain information from foreign tax authorities through tax treaties to verify influencers’ income.
The agency advises social media influencers 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 fifty percent (50%) of the tax or of the deficiency tax.”
The memo signed by commissioner Caesar R. Dulay directed BIR offices to “conduct a full-blown tax investigation against social media influencers residing and/or registered within their respective jurisdictions.” — Michael Lance/BitPinas
This article is published on BitPinas: Social Media Influencers Warned to Pay Tax by the BIR