RMC 97-2021: Taxing Social Media Influencers
PUBLISHED: December 1, 2021
“Like, Share, and Subscribe!” these words have been heard on almost every vlog uploaded on the internet. Social media influencers have really captured the minds and hearts of many. By simply uploading their daily routine, work out tips, travel tours, and basically anything about them, they have not just garnered may followers but also a lot of money. Social media influencers have reshaped the way businesses were conducted. By taping into any influencers blogs or vlogs, sponsoring their outfits, gadgets, accessories and many more, business can easily reach their target markets. Let’s dig deep on what RMC 97-2021 is really about.
Who are social media influencers?
Under RMC 97-2021, they are all taxpayers, individuals or corporations, receiving income, in cash or in kind, from any social media sites and in exchange for services performed as bloggers, vloggers or as an influencer, and from any other activities performed on such social media sites and platforms.
Influencers’ Taxes under RMC 97-2021
RMC 97-2021 states that influencers are liable to income tax and Percentage or Value-Added Tax.
Income Tax – “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 business income.” (Section 4)
Business Tax – “Besides income tax, social media influencers are also liable for business tax, which may either be percentage or VAT.” (Section 4)
Deductions – the following common business expense can be deducted from their gross income:
- 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.
Double Taxation – to avoid the risks of double taxation, a social media influencer shall obtain Tax Residency Certificate (TRC) from the International Tax Affairs Division (ITAD) of the BIR.
Keeping track on your accounts can be challenging, that is why having the right accounting software will definitely help in keeping up with the BIR’s requirements. The objective of this circular is to raise revenues from their undeclared income and remind them of their obligations and of the possible consequences of their failure to pay taxes.
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