Earning through OnlyFans? BIR says that's taxable

Content creators earning on subscription service OnlyFans are also covered by a Bureau of Internal Revenue (BIR) circular reminding online content creators such as YouTubers and social media influencers of their tax responsibility.

When asked if the BIR is also looking into income derived from producing content on OnlyFans, Internal Revenue Deputy Commissioner for Legal Group Marissa Cabreros said, “May I refer you to RMC 97-2021.”

“It includes all transactions online where an individual or corporation earns income in cash or in kind,” Cabreros told GMA News Online.

The BIR Revenue Memorandum Circular No. 97-2021 clarified “the tax obligations of all social media influencers, individual or corporation, with the end goal of raising revenues from their undeclared income and the same time, reminding them of their obligations under the law and of the possible consequences of their failure to pay taxes.”

The BIR defines social media influencers as those generating income for services as bloggers and video bloggers on social media sites such as YouTube, Facebook, Instagram, Twitter, TikTok, Reddit, and Snapchat.

Meanwhile, OnlyFans, launched in 2016, introduced itself as a platform where creators can interact with fans by receiving money directly from them.

The site further grew during the pandemic as it served as a platform for adult-content creators and sex workers to earn money from the safety of their homes.

The problem, however, is sex work is not legal in the Philippines.

But, tax expert Mon Abrea said the BIR has reiterated several times already that income from all sources is taxable, legal or illegal.

“As long as there’s a flow of income, it shall be subject to tax. That’s applicable to all resident citizens. Unless they’re abroad, they have to comply,” Abrea said.

The BIR said social media influencers or online content creators are classified for tax purposes as self-employed persons engaged in trade or business as sole proprietors.

Further, the bureau cited Section 23 of the National Internal Revenue Code of 1997, which indicates that "citizens of the Philippines residing therein and domestic corporations shall be taxable on all income derived from sources within and without the Philippines."

Apart from income tax, BIR said online content creators are also liable for business tax.

"Self-employed individuals whose gross sales or gross receipts and other non-operating income do not exceed the VAT threshold of P3,000,000 shall have the option to avail of the 8% tax on gross sales or gross receipts and other non-operating income," said BIR.

Those who do not pay taxes will be liable for attempting to evade or defeat tax, which imposes a fine of P500,000 to P10 million and detention of not less than six years but not more than 10 years.

Failure to pay taxes may also be a violation of Section 255 of NIRC, which imposes at least P10,000 fine and imprisonment of not less than one year but not more than 10 years.

Aside from this, the BIR also advised its offices to conduct "full-blown tax investigation" against social media influencers residing within their respective jurisdictions.

“The issuance of RMC 97-2021 is a reminder which means BIR has started its investigation probably since last year since the start of the pandemic. Obviously, they’ve gathered information of how much content creators earn since they upload it themselves on their channels,” Abrea said. -MDM, GMA News