THE BIR IS NOW A FOLLOWER: TAX ON ONLINE ENTREPRENUERS EXTENDS TO CONTENT CREATORS
“Along with online businesses, “Vloggers” and Content Streamers will now be required to register with the BIR for tax purposes to aid the government in rebuilding the Philippine economy during the pandemic. ”
The economy of clicks and views
As the Filipino people slowly rebuild themselves financially due to layoffs and business closures, new forms of income have been prevalent, signaling the birth of a new order in our economy. Along with medical suppliers and courier businesses, the digital economy has been immensely lucrative for YouTubers and online content creators that are now amassing unchecked revenues.
Amid uncertainties surrounding the economic and national development during this relentless pandemic, the BIR is now eyeing tax claims on video bloggers, online influencers, Youtubers, and other professions earning money from digital ads on their platforms. This comes from the recently passed House Bill 6765 or the Digital Economy Taxation Act of 2020 which primarily aims to tax digital services to raise more revenue for the government during these trying times.
The bill aims to put a 12% VAT on basically all income-generating transactions online such as digital advertising, commonly found on social media platforms and various search engines, subscription-based services, which include music and video streaming i.e. Netflix and Spotify, and more commonly made nowadays, transactions made electronically or e-commerce platforms such as Shopee and Lazada.
It also imposes upon these digital services and platforms the requirement of having an established resident agent or representative office here in the country to act as a withholding agent. All these taxes are projected to amount to about Php29 billion in revenue that the government should use to combat the pandemic and build the economy once again.
YouTube and Netflix now eyed as a source for government funding
As an addition to the bill, the BIR released Revenue Memorandum Circular No. 60–2020 which gave notice to all e-commerce merchants that they should be registered to the BIR, issue tax receipts, always keep track of accounting records, properly file their tax returns and pay the tax on time.
At a recent house hearing, BIR Deputy Commissioner for Operations Arnel Guballa clarified that online bloggers commonly found on Youtube are required to register their business due to the monetization found in online ads. He also identified other online merchants and digital content creators that will also be required to register, such as:
1. e-Commerce platform providers
2. Internet retailers of consumer goods
3. Digital service, membership, and subscription
4. Digital transaction through the use of electronic platforms and media
5. Online blogging, filmmakers earning from advertising gained from their online channels 6. Ride-hailing services for food, transportation, delivery, or merchandise.
In today’s social situation, more and more people look online to
Pandemic provides good business for online entrepreneurs and artists
As the COVID-19 worldwide battle looks to go overtime up to mid-2021, more people seek solace in getting through their daily activities and responsibilities online. This includes more reliance on food delivery services, online markets that provide door-to-door delivery, and streaming websites, all of which are now generally more needed upon by the public. This in turn opens the gates for unchecked revenue that could eventually lift the economy. Famous YouTubers in the Philippines alone can earn up to Millions through a views system found on the website, that has largely been left without tax guidance.
Many content creators have naturally voiced out their opinion regarding the imposition as untimely and unnecessary, seeing that some innovative Filipinos have looked online to once again earn income after losing stable jobs. Even looking on the consumer side, online streaming services such as Netflix will now be required to pay VAT, which will pass down to the consumers. Such hardships ultimately fall once again on small income earners like Grab or Angkas drivers that will now have to shoulder a part of the VAT imposed on the network orchestrators.
The polarizing bill is still in its growing stages as more problems will arise regarding territoriality and overall logistics since the subject matter being dealt with has numerous sources that can still look to bypass any sort of impositions that may be laid upon. However, as the current health crisis seems to be far from signing off, lawmakers will need to subscribe to an efficient and encompassing policy under this new normal in our digitalized economy.