The Philippines’s Bureau of Internal Revenue (BIR) has issued warnings to the country’s top 250 top-earning social media influencers as part of its pursuit to reclaim unpaid taxes. Only 105 out of the 250 influencers responded by registering as taxpayers and declaring their income with the BIR as of September 15, said Dakila Elteen M. Napao, assistant secretary at the Department of Finance, on October 8, per the Manila Bulletin.
Napao told the local publication that the BIR is currently examining the financial activities of the registered influencers and will probe the incomes of the remaining 145 individuals.
The Philippines’ burgeoning influencer economy has created incredible opportunities for successful influencers. For instance, a millennial couple who go by JaMill on YouTube generate PHP 10 million (USD 197,600) in monthly income, according to local reports.
But not all top-earning social media celebrities comply with their taxation responsibilities. On August 18, the BIR published a revenue memorandum circular as a reminder for influencers to pay their taxes after receiving tip-offs that individuals who work in this sector were skirting the law.
The circular defines social media influencers as self-employed individuals who earn a living via an array of resources, including the YouTube Partner program, sponsored social media and blog posts, display advertising, photo and video sales, digital courses, and subscriptions.
“To constitute gains or profits from the conduct of trade or business, the payments must be received by a social media influencer in consideration for services rendered or to be rendered, irrespective of the manner or form of payment,” the BIR’s circular noted. It also said that if an influencer receives free products or services in exchange for partnerships or promotions, they are mandated to declare the fair market value of such products as income.
A Philippine tax expert warns that influencers who earn lower incomes may also be investigated. “While the BIR will logically prioritize the top influencers, it does not mean those who are earning less will not be investigated. Concerned BIR offices are mandated to conduct a full-blown investigation against social media influencers regardless of income earned,” Mon Abrea, chairman and CEO of tax advisory firm Asian Consulting Group, wrote in his commentary for Rappler.
While influencers are expected to report their incomes and declare the corresponding tax payment on their own, the BIR said in its circular that it has the power to obtain information from foreign entities to verify the information that is provided. “There is a tool in the tax code, whereby the BIR can get information from the third party [to help it track additional sources of income],” Napao added in the local report.
Tax violators will be fined at least PHP 10,000 (USD 208) and may receive a one-year prison sentence, according to the BIR.
