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Published:September 2, 2021

Philippines authorities shine tax spotlight on social media influencers

Philippines authorities shine tax spotlight on social media influencers

According to the Philippines Bureau of Internal Revenue, social media influencers are defined 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 such social media sites and platforms".

Now you may, quite reasonably, be wondering why the Philippines tax authorities need a working definition of a social media influencer. Simply, the BIR is concerned that a growing number of taxpayers in the Philippines are earning substantial incomes from the platforms detailed above, but are not paying tax. In many cases, successful social media influencers are not even registered with the BIR. 

In a circular issued to clarify the tax liability of influencers, the BIR reiterates that influences who earn a living from their social media work are liable for income tax. In addition, social media influencers face potential VAT liabilities. 

 

When do TikTok stars pay VAT?

Influencers whose income is below the P3 million VAT threshold have the option to pay the  8% business tax applicable to self-employed individuals. However, if gross sales exceed the threshold, graduated tax rate applies and the influencer is liable for VAT.

Given the complexity of the tax requirements, anyone who derives their income in the Philippines from social media platforms should consider seeking expert tax advice to ensure they fully understand their obligations.   

In addition to the standard penalties for noncompliance, authorities warn that social media influencers who willfully attempt to evade paying tax will be liable for criminal charges. 

 

Business deductions

With tax responsibilities come tax opportunities. The circular clarifies that social media stars can claim business expenses, as with any business. 

In the case of YouTube stars, for instance, business expenses may include smartphones, cameras, internet fees, and business travel.  

 

Questions or concerns about maximising your VAT reclaim opportunities? Get in touch with VAT IT, the world’s VAT recovery experts.

 

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