The Bureau of Internal Revenue (BIR), on Monday, August 16, released a new circular intending local youtubers, influencers and vloggers on all social media platforms to pay their correct taxes to avoid corresponding penalty provided by their latest memorandum.
The idea of taxing vloggers and influencers rooted as the bureau received tons of reports of certain big time social media influencers who have not been paying their taxes despite earning a huge amount of profit on various digital platforms.
“The BIR has been receiving reports that certain social media influencers have not been paying their income taxes despite earning a huge income from the different social media platforms,” stated in their circular.
BIR defines digital 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 social media sites and platforms.”
In a nutshell, people that work in the digital economy and gain any profit or income from it are subjected to tax according to the definitions of BIR.
As for the computation of tax, influencers, vloggers or social media streamers who do not exceed the VAT threshold of P3 Million are subjected to an 8% tax on their gross sales or gross receipts and other non-operating income in excess of P250,000.
Moreover, the memorandum stated that “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 civil penalty of 50% of the tax or of the deficiency tax.”
As for the penalty, social media influencers who fail to comply will be criminally liable and will be fined P500,000 to P10 million, and will be subjected for imprisonment of six to ten years under Section 254 of the new circular.
BIR also said that the memorandum shall take effect immediately.