MANILA, Philippines — The Department of Finance (DOF) plans to gauge how large the digital economy has grown with the issuance of a revenue memorandum circular (RMC) requiring so-called influencers to register with the government and pay the required taxes.
In an interview with reporters, Finance Undersecretary Antonette Tionko said regulators aim to expand the tax base in digital platforms, as consumers and firms move their transactions online to eliminate the risks posed by physical contact.
Tionko said the Bureau of Internal Revenue (BIR) on Monday issued a RMC mandating social media influencers to register with the government, declare their income and pay corresponding dues.
“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 a sector that I don’t know if they pay tax,” Tionko said.
“We can check now when we are asking them to register already with the BIR, [which] they can do online. That is one of the things,” she added.
Tionko said the government would be able to estimate how large the digital economy has become by demanding business owners based online to submit their income returns and fulfill their financial obligations like usual taxpayers.
Likewise, the finance official said the BIR will check business partners of influencers, including social media platforms and advertisers, to determine how much revenue the parties are generating in their agreements, contracts and part exchanges, also known as x deals.
“The BIR is studying it [influencer economy] right now. They are aware. It’s a rough estimate, but we will know once they register. The other way to do it is to look at their counter parties, to audit their counter parties, like the ones that advertise. You can see the match,” Tionko said.
Under RMC 97-2021, the BIR reminded influencers to pay their income taxes as required by the tax code. Furthermore, the agency said influencers with gross revenues of above P3 million need to remit a value added tax of 12 percent, while those below the threshold must settle eight percent on their gross sales or receipts.
In exchange, influencers are entitled to deductions from gross income provided that they issue invoices for the items. Business costs like video equipment, computer and subscription fees can be deducted from their gross income as allowed by the tax code.
The BIR also warned uncooperative influencers of severe penalties, including jail time, under the law.
Influencers who commit tax evasion will be slapped with a fine of up to P10 million and imprisonment between six to 10 years.
Also, influencers who fail to file their income returns or supply correct information in documents will be punished with a penalty of at least P10,000 and prison term from one to 10 years.
The BIR instructed its revenue districts to conduct a tax investigation against influencers located within their respective jurisdictions.