The Bureau of Internal Revenue (BIR) has stated that Youtubers and other social media influencers who have been earning non-operating income in excess of Php 250,000 and those who do not exceed the VAT threshold of Php 3,000,000 are subjected to tax.
According to BIR Revenue Memorandum Circular No. 97-2021, dated August 16, 2021, the BIR stated that it has been receiving reports that certain social media influencers have not been paying their income taxes despite earning huge income from the different social media platforms.
The BIR defines “social media influencers” as 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.
The said Circular aims to clarify the tax obligations of all social media influencers, individual or corporation, with the end goal of raising revenues from their undeclared income and at the same time, reminding them of their obligations under the law and of the possible consequences of their failure to pay taxes.
Meanwhile, the BIR also allows deductions referred to as “common business expenses” as in the case for YouTubers, the following may be deducted from their gross income include:
- filming expenses (cameras, smartphones, microphone and other filming equipment);
- computer equipment;
- subscription and software licensing fees;
- internet and communication expenses;
- home office expenses (ex. proportionate rent and utilities expenses);
- office supplies;
- business expenses (e.g. travel or transportation expenses related to YouTube business, payment to an independent contractor or company for video editing, costume designer, advertising and marketing costs (cost of contests and giveaway prizes, etc.);
- depreciation expense; and ,
- bank charges and shipping fees
Finally, social media influencers are 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 corresponding tax penalties.
Download and read in full RMC No. 97-2021 HERE.