[Ask the Tax Whiz] Are online sellers and content creators required to pay taxes?

The COVID-19 pandemic cost many people their jobs. This, however, didn’t stop Filipinos from thinking outside the box and finding ways to survive.

The lockdown led to a surge in e-commerce or online shopping, which paved the way for more online sellers and delivery service providers to thrive.

Content creators like YouTubers, influencers, and live streamers also helped many people go through their boredom, depression, or anxiety, while at the same time earning money through various digital platforms either on the side or in lieu of their monthly salaries.

While the government recognized the positive impact of these activities on our economic recovery, the Bureau of Internal Revenue (BIR) was quick to issue Revenue Memorandum Circular (RMC) No. 60-2020 to remind everyone earning income in any manner or form, specifically through electronic platforms or other digital means, to ensure that their businesses are registered and that they are tax-compliant.

Here are the frequently asked tax questions of online sellers and content creators:

Are they required to register with the BIR?

Yes. Based on the provisions of Section 236 of the Tax Code, every person subject to tax shall register once with the appropriate revenue district officer:

1. Within 10 days from date of employment, or
2. On or before the commencement of business, or
3. Before payment of any tax due, or
4. Upon filing of a return, statement, or declaration as required in the Tax Code

Are employees allowed to use their personal tax identification number (TIN) when they create content online as YouTubers or live streamers? How can they get a certificate of registration?

Yes. Individuals are only given one TIN, which can be used whether he or she is an employee or self-employed. However, for those who are self-employed, they need to register their business to secure a certification of registration. Here are the requirements:

1. Submit BIR Form 1901 (Application for Registration)
2. Present any government-issued ID that is readable and untampered, such as birth certificate, passport, driver’s license, etc
3. Other documents required, including DTI Certificate (if with business name)
4. Pay P500 registration fee plus P30 documentary stamp tax to New Business Registrant Officer/Counter
5. Secure BIR printed receipt/invoices (BPR/BPI) or authority to print (ATP)

Can they do business without a TIN? What are the registration documents they need to secure upon registration with the BIR?

No. Business registration is a prerequisite to doing business in the Philippines. A TIN is one of the requirements for registering your business, whether under your name or a corporation.

Aside from a certificate of registration, the taxpayer shall receive a BIR-received copy of the registration form (BIR Form 1901), Notice to Issue Receipt/Invoice (NIRI), BPR/BPI or ATP, and the proof of payment of registration fee (BIR Form 0605).

Will they pay taxes even if they earn P250,000 and below? What are the things they need to do or know once they are registered with the BIR? 

No. Individual taxpayers who earn P250,000 and below shall be exempt from both income and business taxes provided they elect optional 8% upon filing of their first quarter income tax return.

Based on RMC 60-2020, all newly-registered business entities are advised to comply with the provisions of the Tax Code, as amended, and other applicable tax revenue regulations, particularly the following:

1. Issuance of registered sales invoice or official receipts for every sale of goods or services to customers or buyers
2. Keeping of registered Books of Accounts and other accounting records of business transactions
3. Withholding of taxes, as applicable
4. Filing of required tax returns
5. Payment of correct taxes due

Can they file their income tax returns online? Is there a mobile app they can use to file anytime, anywhere? How much will it cost them?

Yes, online filing is possible. In fact, 94% of total tax returns filed for 2020 were filed electronically either using eBIR Forms or eFPS.

You can also download the TaxWhizPH mobile app and file BIR Form 1701/1701A. It’s free!

– Rappler.com

Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB Task Force, chairman and senior tax advisor of the Asian Consulting Group (ACG), founder of the TaxWhizPH mobile app, and founder of the Center for Strategic Reforms of the Philippines (CSR Philippines) – the advocacy partner of the Bureau of Internal Revenue, Department of Trade and Industry, and Anti-Red Tape Authority on ease of doing business and tax reform. Visit www.acg.ph for more information or email mon@acg.ph for tax inquiries.