BIR relying on voluntary tax declarations from social media 'influencers'

MANILA, Philippines — Is the Bureau of Internal Revenue (BIR) monitoring social media influencers and content creators for income declaration and tax payments?

The agency said it has been monitoring since 2021, when it issued a memorandum on taxing online content creators, but clarified that it only checks those who voluntarily declare their income.

At the House Tri-Committee’s second hearing on Tuesday, February 18, lawmakers tackled social media content creators’ compliance with tax regulations as part of their review of tax measures.

Rep. France Castro (ACT Teachers Party-list) asked BIR’s legal division how it monitors tax payments made by social media users who earn from producing content on platforms like YouTube and Facebook. 

“We rely on the voluntary declaration of influencers in so far as their income because there will be great difficulty in monitoring the same considering that their income primarily comes from foreign income payors,” BIR legal representative Tobias Gavin Arcilla told the panel.  

He added that in auditing and investigating online content creators who have reported their taxes, the agency cross-checks data with foreign tax jurisdictions and declared income tax returns to verify actual earnings.

Castro questioned why the BIR is waiting for content creators to voluntarily declare their income taxes, saying the list of earnings could be requested from platforms like YouTube. 

What the measure allows. Revenue Memorandum Circular 97-2021, issued in August 2021, states that the BIR can obtain information and verify the income of social media influencers through the Exchange of Information (EOI) provision in tax treaties with other countries.

“To enhance tax compliance and eventually, increase tax revenues, concerned BIR offices are advised to conduct a full-blown tax investigation against social media influencers residing and/or registered within their respective jurisdictions,” the memorandum added. 

The BIR also urges social media content creators to accurately declare their income, warning that they may be subject to investigation. For those under foreign jurisdictions, the agency is required to coordinate with treaty partners.

“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,” the memorandum added. 

Penalties. The taxation measure also outlines the criminal liability of individuals who attempt to evade taxes, fail to file tax returns or significantly underdeclare their taxable income.

Social media content creators found evading taxes would face a fine ranging from P500,000 to P10 million, along with six to 10 years of imprisonment, as per the National Internal Revenue Code.

They may also be subject to a civil penalty equivalent to 50% of the tax due or the deficiency tax.

However, Arcilla explained that the agency cannot investigate specific taxpayers, as audits are conducted randomly or focused on those classified as “high risk.” 

Check and balance. To examine a taxpayer’s books, a Letter of Authority has to be issued, requiring the taxpayer to submit the necessary documents. A Notice of Discrepancy is then issued to those liable for deficiency taxes, followed by assessments before a final resolution.

Rep. Romeo Acop (Antipolo, 2nd District) asked Arcilla if he was aware of the 2021 memorandum, to which Arcilla confirmed his knowledge, noting that it has been in effect since that year.

The Tri-Committee requested the BIR to submit a report on the number of social media influencers taxed since 2021, and Arcilla agreed to comply.

Social media users with large followings, particularly those who have been fact-checked, were also invited to the hearing, which also aims to establish rules regulating content on social media platforms amid rampant disinformation online. However, most were not present in the session.