[Ask the Tax Whiz] How can influencers comply with BIR rules?

I’m just a micro influencer earning less than P250,000 a year. Do I still need to comply with Revenue Memorandum Circular (RMC) No. 97-2021? How much tax do I need to pay? 

Yes. Regardless of how much you earn, all social media influencers, content creators, online gamers, and live streamers are required to comply with RMC 97-2021. However, the tax payment will depend on your income level.

• If your annual income is not more than P250,000, you’re exempted from paying income tax as provided in the Tax Reform for Acceleration and Inclusion law. However, you still have to pay 1% percentage tax based on gross income quarterly.
• If your annual revenues do not exceed P3 million, you may choose to pay optional 8% tax in lieu of both graduated income and percentage taxes.
• If your annual revenues exceed P3 million, you have to pay 20% to 35% graduated income tax and 12% value-added tax.

Other than income and business taxes, you may also have to file and pay withholding taxes depending on the expenses you incur, such as if you have income payment subject to expanded withholding tax and salary expense which is subject to withholding tax on compensation.

I’m a newbie when it comes to business. My online business just started and I’m doing online hosting and live streaming on the side. How do I get started? How can I register with the Bureau of Internal Revenue (BIR)? Is there online registration?

It’s best to always start a business the right way. Register with the Department of Trade and Industry for your trade name and with the BIR to secure your certificate of registration (BIR Form 2303).

Just visit www.bir.gov.ph and use the NewBizReg portal. This service portal was launched as part of the BIR’s efforts to ramp up digitalization and improve the ease of doing business.

NewBizReg serves as an alternative approach for individuals and corporations to submit their application for registration of business (head office and branch) to the BIR. In this process, taxpayer-applicants shall prepare all scanned copies of required documents, which they will submit via email through the website to the concerned BIR revenue district office.

Paying the annual registration fee on NewBizReg (P500) and its loose documentary stamp tax (P30) can now be done via electronic payment channels, including GCash, PayMaya, Landbank, Bancnet, UnionBank, and PisoNet. Influencers must provide a copy of the proof of payment to the BIR via email to secure the schedule of pickup of their certificate of registration.

There’s so much corruption in the government. It’s just so hard to earn money during this pandemic and even harder to pay taxes when the government can’t even do basic due diligence in spending our taxes. Assuming I refuse to comply, what will happen? Is there a fine or penalty? How do I stay out of trouble with the BIR?

Failure to comply with RMC 97-2021 may trigger an audit and investigation by the BIR. If you are found guilty of violating the tax code, you will be slapped with a fine of not less than P500,000 but not more than P10 million, and sentenced to prison between 6 and 10 years.

Education is key. Compliance is everything. It’s not enough that you know. You need to comply and pay the right taxes to avoid unnecessary penalties and compromises.

You may subscribe to the TaxWhizPH YouTube channel and watch episodes on how to register your business and ensure basic tax compliance to educate you and help you stay out of trouble with the BIR.

Here’s the latest BIR IN ACTION Live episode: Paano ba ang Online Registration ng BIR? BIR in Action Live is powered by TaxWhizPH Digital Solutions.

Got more questions about taxes? Catch the next edition of #AskTheTaxWhiz and download the TaxWhizPH mobile app for free on Google Play and the App Store. You can also avail of our free tax assistance service by answering our Initial Profiling Form or emailing us at consult@acg.ph. Use the promo code ACG10RAPPLER.

Watch out as well for the Asian Consulting Group‘s new program for business owners on how to get rid of BIR audits. Like and follow us for updates! – Rappler.com

Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB Task Force. With the TaxWhizPH mobile app as his brainchild, he was recognized as one of the Outstanding Young Persons of the World, an Asia CEO Young Leader, and one of the Ten Outstanding Young Men of the Philippines because of his tax advocacy and expertise. Currently, he is the chairman and CEO of the Asian Consulting Group and trustee of the Center for Strategic Reforms of the 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 him at mon@acg.ph and download the TaxWhizPH app for free if you have tax questions.