The Department of Finance (DOF) is looking at means to effectively tax web-based transactions, particularly those that pass through social media influencers.
Finance Secretary Carlos Dominguez III said he has instructed the Bureau of Internal Revenue (BIR) to set up a unit dedicated to track sales of goods done online, and to coordinate with their counterparts in other countries to determine how to properly tax these digital transactions.
BIR Commissioner Caesar Dulay said he has discussed with the bureau’s National Investigation Division how this can be done, initially through a task force that will monitor the sales of goods and services done through the internet.
The Philippines, however, has the electronic commerce law, or Republic Act 8792, which regulates transactions done through an electronic network that includes the internet.
Dominguez said the BIR should consult with its counterparts in Russia or Korea to find out how to properly and effectively tax digital transactions.
“We have to catch up with these guys,” Dominguez said during a recent DOF executive committee meeting, referring to the surge in online sellers as most consumers have turned to buying goods via digital platforms amid the pandemic.
Apart from online sellers, the BIR is also keeping tabs on the tax compliance of social media (socmed) “influencers” in the country, the DOF said in a statement.
Earlier, the BIR said it will investigate an initial list of 250 influencers to check if they have been paying their taxes.
According to the BIR, letters of authority for the conduct of investigation had been issued to certain socmed influencers found to be “top earners” in their field.
It added that socmed influencers who earn money from their posts on digital media are classified as self-employed individuals, or persons engaged in trade or business as sole proprietors.
Their earnings are generally considered as business income, as defined under BIR’s Revenue Memorandum Circular (RMC) No. 97-2021 issued last August 16.
Under RMC 97-2021, socmed influencers should pay income tax and percentage tax or, if applicable, the value-added tax, as mandated under the National Internal Revenue Code and other existing laws.
Based on the circular, socmed influencers are defined as those who derive their income from the following sources: YouTube Partner Program; sponsored social and blog posts; display advertising; becoming a brand representative/ambassador; affiliate marketing; co-creating product lines; promoting own products; photo and video sales; digital courses, subscriptions, e-books; and podcasts and webinars.
