Philippines: BIR Directs Monitoring and Verification of Tax Compliance of Online Merchants, Social Media Influencers and Other Businesses Operating Through Digital or Online Platforms
On October 29, 2021, the Bureau of Internal Revenue (“BIR”) issued Revenue Memorandum Order No. 29-2021 (the “RMO”), directing all Revenue District Officers (“RDOs”) under all Revenue Regions (“RRs”) and the LT Divisions (”LTDs”)/LT Audit Divisions (“LTADs” Regular or Excise) under the Large Taxpayers Service (“LTS”) to monitor and verify the tax compliance of online merchants, social media influencers (”SMIs”) and other businesses operating through digital or online platforms who are registered or residing within their jurisdictions.
The RMO creates a Special Task Force (“STF”) in every revenue regional office and in the LTS to help the concerned offices by (i) creating a database of all online sellers of goods and/or services, SMIs and properties being leased out by online lessors within their jurisdictions, (ii) determining which among such taxpayers are or are not registered with the BIR; (iii) evaluating the tax compliance of those registered (e.g., payment of annual registration fee, issuance of sales invoices or official receipts, keeping of books, etc.), (iv) notifying those who are not registered to secure registration and pay voluntarily any unpaid taxes due on past transaction, and (v) submitting a Monthly Accomplishment Report (MAR) with their respective Regional Directors (“RDs”) and the Assistant Commissioner (ACIR)-LTS, on or before the 5th day of the following month. In evaluating the tax compliance of registered taxpayers, the STFs are allowed to conduct a Tax Compliance Verification Drive.
The RMO provides that voluntary declarations made by the subject taxpayers shall be verified through the exchange of information (EOI) mechanism existing under valid and effective treaties. In case of inconsistencies, the STF shall recommend to the concerned RDO, LTD, LTAD, Regional Investigation Division or National Investigation Division the issuance of Letters of Authority (“LOA/s”) against the taxpayers. Once obtained, the STF shall initiate a request for information from a treaty partner through the EOI Unit of the International Tax Affairs Division to verify the truthfulness of such information.
The MAR submitted by the STF shall be transmitted by the ACIR-LTS and the Regional Directors to the Office of the Commissioner, copy furnished the ACIRs for Assessment Service (AS) and Legal Service (LS). The ACIR-LS shall provide the ACIR-AS and ACIR-LTS a copy of any information obtained from a treaty partner for the proper monitoring of disposition and utility of information given to the RDOs/LTDs/LTADs. On the other hand, the ACIR-AS and ACIR-LTS shall provide the ACIR-LS information on all LOAs issued to the subject taxpayers for evaluation and determination whether additional information should be requested by the ITAD from a treaty partner.
The RMO states that non-compliance with its directives shall subject the concerned revenue personnel to administrative sanctions.
The information provided here is for information purposes only, and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.
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