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BIR keeps close eye on Airbnb’s tax compliance
By Beatrice M. Laforga, Reporter
THE BUREAU of Internal Revenue (BIR) has started to monitor the tax compliance of online leasing platforms such as Airbnb, top officials said.
“We are checking and validating Airbnb tax payments and compliance,” BIR Deputy Commissioner Arnel SD. Guballa told BusinessWorld in a Viber message on Thursday, without disclosing further details.
House Ways and Means Chair and Albay Rep. Jose Maria Clemente S. Salceda said the BIR is already imposing taxes on online leasing platforms but “had difficulties with enforcing the regulations.”
“Airbnb itself said in 2019 that they want to contribute revenues. I’ll keep working with the BIR to find a satisfactory way to enforce the law on them,” Mr. Salceda, who also authored a bill on digital taxes, said on Thursday.
The government is still pushing for the taxation on the sector, Finance Secretary Carlos G. Dominguez III said, as the government scrambles to find more funds amid the coronavirus pandemic.
“Yes, Airbnb engages in taxable transactions,” Mr. Dominguez confirmed on Thursday when asked if the proposal to slap taxes on online leasing services is still on the table.
Without citing details on the target timetable for the plan, Mr. Dominguez reminded businesses to register with the BIR for tax purposes as well as with local government units (LGUs).
“All those owners ng property (located in the Philippines) listed sa Airbnb (and similar platforms) are part of the call of BIR to properly comply with registration requirement, because they are lessors of real property,” BIR Deputy Commissioner Marissa O. Cabreros said in a separate Viber message.
The bureau issued Revenue Memorandum Circular No. 60-2020 in June last year to remind online sellers to register with the BIR. Some 7,262 businesses have registered so far.
The government and lawmakers are looking at imposing the 12% value-added tax (VAT) on goods and services sold online after the coronavirus pandemic propped up online transactions.
House Bill 7425 or the Value-Added Tax on Digital Transactions Act seeks to impose a 12% VAT on online transactions, including online leasing services such as Airbnb. It is still pending at the House of Representatives.
Mr. Salceda said they refer to Airbnbs as “network orchestrators” because they provide the service of connecting customers with service providers, and take a cut out of the revenue.
“That is clearly a ‘value-added’ service that can be taxed,” he said.
“The bill defines them and the economic and regulatory space they occupy. However, it was the BIR’s recommendation that we focus primarily on the selling of goods and digital services. But in its current form, there are provisions that we can still apply to leasing platforms”
However, Mr. Salceda said it is difficult to estimate the revenue impact of taxing the sector because they are yet to determine the value chain and which taxpayer is responsible for which taxes.
“For now, using the VAT registration system for non-residents under the Digital VAT proposal, and the proposal to make them withholding agents for VAT is probably the most efficient first step,” he said.
The DoF estimates up to P17 billion in potential VAT collections from the digital economy.