MANILA, Philippines — The taxman will investigate 250 high-earning social media “influencers” to check whether they have been paying their taxes, as the government looks to cash in on the exponential growth of the digital economy amid the pandemic.
Letters of authority (LOA) for the conduct of a probe have been sent to social media personalities who were included in the Bureau of Internal Revenue’s “initial list” of “top earners” in their field, the Department of Finance said in a statement on Thursday.
The bureau said influencers who “willfully attempt to evade the payment of tax or willfully fail to make a tax return, to supply accurate and correct information or to pay tax” will be held criminally liable in addition to the payment of taxes and corresponding penalties.
“We encourage them to register, and then we have the profiling of over 250 personalities,” BIR Deputy Commissioner Arnel Guballa said.
“We will do the investigation so that they would pay the necessary corresponding tax on their earnings,” Guballa added.
Generally, influencers are people who have built a large following on social media and are earning money by creating content that they can monetize through advertisements and sponsored posts, among other ways.
Under a new circular issued last month, BIR reminded internet personalities to pay income tax and percentage tax or, if applicable, the value-added tax (VAT).
For the government, the new regulations were all meant to catch much-needed revenues generated from economic activity online, which saw a dramatic growth amid the pandemic. BIR raises 80% of tax revenues every year, so its weak collection performance due to a pandemic-induced economic slump has a devastating impact on state finances, particularly in funding costly coronavirus programs.
The BIR circular defined social media influencers as those who derive their income from sources such as the You Tube Partner Program; sponsored social and blog posts; display advertising; and becoming a brand representative or ambassador.
The circular added that these influencers may also generate income through affiliate marketing; co-creation of product lines; promotion of own products; photo and video sales; digital courses, subscriptions, e-books; and podcasts and webinars.
The bureau also explicitly stated that even influencers who receive free products in exchange for social media shout-outs and posts must declare as income the “fair market value” of the goods they got.
Meanwhile, income treated as royalties from another country, including payments under the YouTube Partner Program, is likewise included in the computation of the gross income of the influencer. BIR said it has the power to obtain information from tax authorities abroad through tax treaties it forged with other countries.
“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 percent) of the tax or of the deficiency tax,” the circular read in part.
Apart from social media influencers, BIR earlier reminded online sellers that they have to pay sales and income taxes. Just recently, the bureau said it is studying how to collect taxes from cryptocurrency deals.