BIR begins socmed tax compliance probe

The Bureau of Internal Revenue (BIR) began its probe on social media tax compliance, following its reminder for those who earn income from such to register and settle their obligations to the government.

In a report to Finance Secretary Carlos Dominguez III, the Bureau said that it has already issued Letters of Authority or LOA for the conduct of investigation to social media influencers.

“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,” BIR Deputy Commissioner Arnel Guballa explained.

According to the agency, social media influencers are classified as self-employed individuals or persons engaged in trade or business as sole proprietors hence, the taxability of their income from the digital platform.

In its recently issued Revenue Memorandum Circular No. 97-2021 last month, social media influencers must pay income tax and percentage tax or, if applicable, value-added tax.

Still, the Circular clarified that free goods received in exchange for promotions must also be declared as income using the fair market value of such products while royalties from another country like the YouTube Partner program must also be included in the gross income computation.

“It must be emphasized that the BIR also has the power to obtain information from foreign tax authorities pursuant to the Exchange of Information provision of the relevant tax treaties,” it explained.

“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,” it added.

The Bureau warned social media influencers who fail to truthfully declare the full extent of their income will be liable for tax evasion and civil penalty of 50 percent of the tax or of the deficiency tax.

The BIR earlier said it has been receiving reports that certain social media influencers have not been paying their income taxes despite earning huge profits from various social media platforms.

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