Tax obligations of online merchants and social media influencers

DO you own an online business or earn income from being a social media influencer? The Bureau of Internal Revenue (BIR) has intensified tax enforcement in online merchants and social media influencers. Even before the start of the Covid-19 pandemic, the BIR issued Revenue Memorandum Circular (RMC) 55-2013 on Aug. 22, 2013, to clarify the taxability of digital transactions. Taxpayers’ obligations in relation to online business transactions include online shopping or online retailing, online intermediary service, online advertisement/classified ads, and online auction.

With the popularity of social media influencers or influencer marketing from various social media platforms, the BIR’s tax enforcement campaign is now focused on RMC 97-2021 issued on Aug. 16, 2021. It cited the tax obligations of all social media influencers in the RMC, including possible consequences of their failure to pay taxes. Social media influencers, other than corporations and partnerships, are classified, for tax purposes, “as self-employed individuals or persons engaged in trade or business as sole proprietors, and therefore, their income is generally considered as business income. Income derived by social media influencers could come from various 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.”

Persons who conduct business through online transactions are required to register their business at the Revenue District Office having jurisdiction over their principal place of business/head office (or residence in case of individuals. Then, they need to secure Authority to Print invoices/receipts and register Books of Accounts for business; issue BIR-registered invoice or receipt, either manually or electronically, for every sale or lease of goods and properties or services; withhold the required tax and remit to the BIR; file applicable tax returns; and pay the correct taxes, among others.

The Basic Registration Guidelines on RMC 60-2020 cover not only partner sellers/merchants but also other stakeholders involved, such as the payment gateways, delivery channels, internet service providers, and other facilitators. To encourage business entities to register with the BIR, the Bureau waived the penalties for late registration, including the self-declaration of past transactions. Such a waiver is still subject to payment of pertinent taxes due without the corresponding penalties within a period specified in the RMC. Check the Tax Guide for Online Sellers on the BIR Website in order to be informed on what they need to comply with regarding the taxation of businesses.

Unregistered “subject taxpayers” will soon be revealed through cross-checking of databases. With the collaboration of BIR and the Department of Trade and Industry (DTI), the names of taxpayers engaged in online business activities who registered their Business Name will undergo verification/matching with the BIR taxpayers’ registration database. The Special Task Force (STF) will notify them to register and pay any unpaid taxes due of past transactions. If the notified taxpayers will not register and pay their tax obligations within the period, the STF will endorse the case to the concerned Regional Investigation Division or National Investigation Division for the conduct of preliminary investigation.

Aside from waiving penalties from late registration, BIR could introduce a one-stop shop to facilitate the process. As a freelance writer, it was daunting to go through all the registration steps by myself. Through the services of an accountant, I obtained a Certificate of Registration or BIR Form 2303, BIR registered official receipts, including the yearly filing of income taxes. One could also accomplish their tax duties with minimum effort through the use of online tools like Since 2016, Taxumo, an accredited online tax compliance tool in the Philippines, has helped thousands of freelancers, self-employed professionals, small business owners and corporations file and pay their taxes. Taxes are a vital part of an economy. Earning from an online business or as a social media influencer brings financial independence, but it comes with enormous responsibilities. One of them is settling your income tax in the Philippines.

First published at the Sunday Business & IT, The Manila, Times, December 18, 2022.