The Bureau of Internal Revenue (BIR) in a memo released on Monday, August 16, made it clear that foreigners creating content in the Philippines will be taxed.

“For resident aliens, any income derived from Philippine-based contents shall generally be taxable,” the tax agency said in BIR Revenue Memorandum Circular No. 97-2021, which can be viewed here.

The BIR is set to conduct a “full-blown tax investigation” against social media influencers, as the Philippine government looks for more cash amid the coronavirus pandemic.

The probe will be looking at Filipino content creators and influencers but will also include foreigners making content within the Philippines, with the burden of proving that a certain piece of content was not made specifically inside the Philippines, and as such non-taxable by the Philippines, to lie upon the resident alien. 

The BIR said, “the burden of proof that the income was derived from sources without the Philippines lies upon the resident alien.” 

“Absent such proof, the income will be assumed to have been derived from sources within the Philippines.” 

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While the BIR only explicitly mentioned “resident aliens” in that specific statement, the agency did cite Section 23 of the National Internal Revenue Code (NIRC) of 1997 in an earlier part of the memo, saying “a non resident citizen, resident, non-resident alien, and resident foreign corporations shall be taxable on income derived from sources within the Philippines.”   

The BIR makes a distinction between citizens and aliens regarding taxation. Section 23 says, “A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines” while an “alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within the Philippines.”

The BIR defines resident aliens as “an individual whose residence is within the Philippines and who is not a citizen thereof” while non-resident aliens are “an individual whose residence is not within the Philippines and who is not a citizen thereof.” 

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The agency said the probe covers influencers and vloggers earning from YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, and Snapchat, among others.

The memo also provided details on legal tax deductions in the Philippines for income derived from sources outside the country. 

The agency emphasized that it has “the power to obtain information from foreign tax authorities pursuant to the Exchange of Information (EOI) provision of the relevant tax treaties.”

“The social media influencers are, therefore, advised to voluntarily and truthfully declare their income and pay their corresponding taxes without waiting for a formal investigation to be conducted by the BIR to avoid being liable for tax evasion and for the civil penalty of fifty percent (50%) of the tax or of the deficiency tax,” the BIR warned.  – Rappler.com   

Editor’s note: We deleted a paragraph that named foreign vloggers to avoid misinterpretation by readers that they ought to be paying taxes in the Philippines.