Whenever my content creator friends and social media influencers would ask me when is it the best time to pay taxes, I would always tell them that once you are earning, you have to pay. And this is not because I want to be some goody two shoes in this industry, but personally, what I value most is peace of mind. So today, let’s go through this RMC about Taxation for Social Media Influencers.
Believe me! I had my fair share of missed tax filings and books that were not updated years ago, and it was not a fun thing to go through. I had to pay exorbitant fees, but I couldn’t blame anybody else. Paying taxes is the responsibility of the tax payer, so I couldn’t blame my accountant or blame the BIR for charging me. Having no knowledge of the law is not an excuse, so we all better brush up on learning about taxes.
Why are we discussing this? Yesterday, our tax ministry, the BIR, released a Revenue Memorandum Circular (RMC) or a memo reminding everyone that all Social Media Influencers to file and pay their taxes. This is RMC97-2021. Some of you would ask “who are Social Media Influencers”? So the BIR actually gave a run down of who these people are and they specifically mentioned those who are under the YouTube Partner Program or basically people who are earning from Youtube.
But, if you earn via direct advertising, meaning you get paid by brands, or you earn via other platforms like Facebook (via support badges, stars, etc.), Twitch (via bits and subs), Kumu (via in app gifts, etc.), Instagram, even Affiliate commissions, please please please do pay taxes for these things, well. The law states that if you earn any income on Philippine soil, you will have to declare taxes for these earnings.
So how do you begin?
I wrote a blog post before where I explained how you can start paying taxes as a freelancer: A FREELANCER’S AND CONSULTANT’S GUIDE TO USING TAXUMO
Feel free to go through this post.
In the RMC, BIR also goes through the allowable deductions or basically, what are the expenses that you can declare. It also goes through compliance from registration, to updating your books and filing and paying taxes (which I discussed in the shared linked above for Freelancers).
The BIR goes on to remind the penalties for tax evasion and failure to file a return.
After that, the BIR discusses double taxation. Double taxation is basically being taxed by the platforms that you use and being taxed as a professional. An example for this is that Google LLC withholds 24% of your earnings. Then when you declared in the Philippines as a tax payer, you will have to pay VAT/Percentage, Income tax and (if applicable) withheld taxes.
To avoid double taxation, one must secure a tax residency certificate (TRC) from the BIR and then this is submitted to the foreign platform who is applying taxes in their own countries. Note that this is only applicable to platforms and entities in countries that the Philippines has a tax treaty with.
What happens to your taxes in that foreign country? In the case of Google LLC, the previously withheld 24% will now become 15% and then you still have to pay taxes in the Philippines. Of course, for other platforms, they will have yet to share what their own taxes are.
So with the reminder yesterday, the last section of the RMC states this…
So there you have it. If you have questions or you need assistance, feel free to chat with Taxumo via the chat button on their site: https://www.taxumo.com or email them your inquiries firstname.lastname@example.org.