If you are an Influencer or a Youtuber who uses social media to earn revenue, here’s some news for you: BIR issued a circular that aims to tax any income received by social media influencers.
“The BIR has been receiving reports that certain social media influencers have not been paying their income taxes despite earning huge income from the different social media platforms,” it has stated in their circular.
BIR defines social media influencers as “all taxpayers, individuals or corporations, receiving income, in cash or in kind, from any social media sites and platforms (YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, Snapchat, etc.) in exchange for services performed as bloggers, video bloggers or “vloggers” or as an influencer, in general, and from any other activities performed on such social media sites and platforms.”
In a nutshell, anything that involves the digital economy–regardless if you are an influencer, YouTuber, or a casual vlogger who earns from making videos––is subject to tax according to the definitions of BIR.
As for the computation of the tax, those who do not exceed the VAT threshold of Php 3,000,000 are subjected to an 8% tax “on gross sales or gross receipts and other non-operating income in excess of Php 250,000.” Like with anything that is taxable, BIR stated that common business expenses–like equipment, communication expenses, and business expenses, can be deducted from their gross income.
“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 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 idea of taxing vloggers and influencers is going to be a tough road for BIR, as there is no true method on how you can track all of them who earn revenue through these digital platforms. Aside from not having a proper, specific definition of what is taxable and how the tax is computed, the BIR might violate the Data Privacy Act at one point or another.
Despite BIR saying that the circular will take effect immediately, there will be a barrage of questions that need to be answered.