The Creator and Influencer Council of the Philippines (CICP), an organization of social media content creators that include bloggers and video bloggers, has said it is open to a dialog with the Bureau of Internal Revenue to tackle the tax agency’s issuance of a memorandum that reminded social media influencers of their tax obligations.
In a statement Friday, CICP said it commended the BIR in issuing the circular as it gave a general overview of all the tax rules and regulations applicable to the members of its organization.
“Furthermore, the said circular provides information as to how our members could benefit from certain tax treaties between the Philippines and its partner countries. Ultimately, this information will help our members in avoiding double taxation,” CICP said.
CICP acknowledged that payment of taxes was the lifeblood of the government and allowed it to provide necessary services especially in these uncertain times.
“As such it is imperative among us, as citizens, to do our part by paying proper taxes. We view the circular as an opportunity to exemplify the importance we give to paying taxes, and show others that we view it as a patriotic duty that any responsible citizen should fulfill,” it said.
But it hopes the BIR will soon introduce certain mechanisms that will ease the burden of tax compliance by using these digital platforms, not only for the benefit of the Influencers, but also for the benefit of all taxpayers.
“We would be happy to dialogue with the Bureau about these initiatives,” CICP said.
CICP further said it is now crafting a Code of Ethics centered around content standards, fair dealing, transparency, social responsibility and compliance with law.
“For this, we are thankful for the BIR in giving this opportunity not only for us to promote the organization’s core values, but also for us to show that we are doing our part as responsible citizens of this country,” it said.
Earlier this week, Finance Undersecretary Antonette Tionko said the Finance Department was looking at an undetermined amount of tax to be generated from the so-called “social media influencers” who are making money through online content.
The BIR defines social media influencers as those generating income for services as bloggers and video bloggers on social media sites such as YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, and Snapchat. Full story on manilastandard.net.
“That is one of the measures we are adopting because that is the sector that I don’t know if they pay tax. We can check now when we ask them to register with the BIR. They can do it online. We are trying to make it easy for the local online sellers and people with transactions online by making registrations online also,” Tionko said.
When asked how much taxes could be captured from the social media influencers, Tiokno said the BIR was currently studying it.
“We will know once they register. The other way to do it is to look at their counterparties, to audit their counterparties, like the ones that advertise and all that. You can see the match, that is the way to do it. Hopefully when they register, we will get the number,” Tionko said.
Last Monday, the BIR issued a memorandum reminding social media influencers of their tax obligations.
Signed by BIR Commissioner Caesar Dulay, it was issued to inform social media influencers of their tax obligations and the possible consequences for not paying them.
“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 from social media platforms for tax purposes,” the memorandum read.
“Whatever may be the reasons, it is now the most opportune time to discuss the tax obligations of these social media influencers,” it said.
Social media influencers are also liable for income tax and percentage or value-added tax.
The BIR also said social media influencers are classified for tax purposes as self-employed persons engaged in trade or business as sole proprietors.
Further, the bureau cited Section 23 of the National Internal Revenue Code of 1997, which indicates that “citizens of the Philippines residing therein and domestic corporations shall be taxable on all income derived from sources within and without the Philippines.”
Apart from income tax, BIR said online content creators are also liable for business tax.
BIR said self-employed individuals whose gross sales or gross receipts and other non-operating income did not exceed the VAT threshold of P3,000,000 shall have the option to avail themselves of the 8 percent tax on gross sales or gross receipts and other non-operating income.
Meanwhile, social media influencers are allowed to deduct all ordinary and necessary expenses paid during the taxable year.
These include development, management, operation and conduct of the trade, business or exercise of profession.
For example, YouTubers may deduct the expenses from their gross income including film expenses, computer equipment, subscription and software licensing fees, internet and communication expenses, and office supplies, among others.
Those who do not pay taxes will be liable for attempting to evade or defeat tax, which imposes a fine of P500,000 to P10 million and detention of not less than six years but not more than 10 years.
Failure to pay taxes may also be a violation of Section 255 of NIRC, which imposes at least P10,000 fine and imprisonment of not less than one year but not more than 10 years.
Aside from this, the BIR also advised its offices to conduct “full-blown tax investigation” against social media influencers residing within their respective jurisdictions.