The Bureau of Internal Revenue (BIR) issued a memo circular on Monday, Aug. 16, reminding social media influencers’ of their tax obligations.
“Social media influencers other than corporations and partnerships are classified for tax purposes as self-employed individuals or persons engaged in trade or business as sole proprietors, and therefore, their income is generally considered business income,” noted Internal Revenue Commissioner Caesar Dulay.
According to the BIR, it received reports that “certain social media influencers have not been paying their income taxes, despite earning huge income from the different social media platforms.”
It added that some influencers are also not registered with the BIR or are registering under a different business line and not declaring their earnings. These influencers may be liable for both personal income tax and business taxes according to the BIR.
The BIR stated that gains or profits received by the social media influencer or services rendered or to be rendered irrespective of the manner or form of payment are included under income tax.
It added that “free products received in exchange for promoting them on their YouTube channels or other social media accounts” must be declared as income by the influencer.
In addition, payments made to social media influencers and creators under the YouTube Partner Program should also be included in their gross income and subject to schedular or corporate tax rates.
The BIR also added that resident aliens with income derived from Philippine-based content are also taxable.
“Thus, the burden of proof that the income was derived from sources without the Philippines lies upon the resident alien. Absent such proof, the income will be assumed to have been derived from sources within the Philippines,” the BIR stated.
On top of all this, the BIR stated that social media influencers must pay business taxes, either as a percentage or a VAT (Value Added Tax).
That said, self-employed individuals who earn less than P3 million in gross sales or gross receipts will be able to claim the 8% tax on gross sales or gross receipts over P250,000, the BIR said.
It added that mixed-income earners shall be taxable for all income earned from compensation and income earned from business or practice of profession.
As for those influencers who fail to comply, the BIR said that they will be fined from P500,000 to P10 million.
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