[Ask the Tax Whiz] Is Airbnb taxable in the Philippines?

The Philippine Tax Whiz advises Airbnb hosts to register with the Bureau of Internal Revenue (BIR) if they offer their property for short- or long-term rental.

No new legislation is needed, as existing laws and regulations apply to the rental of property for residential or commercial purposes, whether booked directly, online or through digital platforms like Airbnb.

How do I register with BIR as an Airbnb host? What taxes do I have to pay?

Generally, you must register as a freelancer to rent out your property. As a self-employed person, you must obtain a business name, license and registration certificate from the Department of Trade and Industry (DTI), local government and BIR, respectively.

You can subscribe to the TaxWhizPH YouTube channel and watch the episode on the business registration process in the philippines.

Initially, you will have to pay local tax (business license), income tax and percentage tax, if your annual gross sales do not exceed 3 million pesos. Otherwise, you have to pay 12% Value Added Tax (VAT).

I just started renting my apartment through Airbnb last month. Do I have to issue official receipts? I only received one reservation due to quarantine restrictions on and off. Is there any tax relief or exemption for low earners like me?

You must first register with the BIR and issue an official receipt for each rental income payment you receive. When registering with BIR, you can purchase a BIR-printed receipt so you don’t have to ask for printing or ATP permission and wait one to two weeks for your OR to be ready.

First, if your total assets do not exceed 3 million pesos, you can apply for barangay or BMBE micro-enterprise business certification at the DTI Negosyo center near you. It will grant an income tax exemption for two years.

Secondly, if your annual gross sales do not exceed 3 million pesos, this means that you will have to pay a tax percentage of 3% per quarter, but under the CREATE law (Corporate Recovery and Tax Incentives for Enterprises), you will only pay a 1% percentage tax from July 1, 2020 to June 30, 2023.

As retirees, my wife and I transformed our small house in Boracay into a bed and breakfast for local and foreign tourists. We were advised to set up a company to avoid inheritance tax in case one of us died prematurely. Unfortunately, the COVID-19 pandemic has occurred. We are still alive but we have suffered massive casualties. Recently we started getting bookings from Airbnb and now the BIR is suing us. Please help us.

a. Do we still need to file and pay taxes even during lockdown when we haven’t earned any income?
b. As a company, can we carry the losses we incurred in 2020 and even 2021 over the next three to five years to save on taxes?
vs. Since we registered a company, is there any tax relief for small businesses like ours?
D. Can we operate as independents instead?
e. If we have tax questions, where do we go or how do we get help? We cannot pay the professional fees of tax advisers or lawyers

a. Yes. Once you register with the BIR, you must file tax returns as indicated on your registration certificate (BIR Form 2303). If you have no income, you can simply file what is called a declaration of non-payment.

b. Yes. Normally, you can carry forward net operating losses as a deduction from gross income for the next three consecutive years only. However, pursuant to the Bayanihan to Recover as One Act or Bayanihan 2 (Section 4) and as implemented under Revenue Regulations (RR) No. 25-2020, taxpayers who have incurred operating losses net income for the 2020 and 2021 tax years can sustain these losses. as deductions for the next five consecutive years following the year of the loss.

vs. Yes. In accordance with the CREATE Law (Section 6) and implemented under RR 5-2021, small companies with net taxable income not exceeding 5 million pesos and total assets not exceeding 100 million pesos excluding land will be taxed at 20%.

D. Yes. But you need to weigh the pros and cons before deciding to register as self-employed and transfer your corporation’s operations.

e. If you have tax questions, simply download the TaxWhizPH mobile app. It’s free and you can use the unique Ask the Tax Whiz feature to ask your tax questions.

– Rappler.com

Mon Abrea, CPA, MBA, is the co-chair of the Paying Taxes-EODB working group. With the TaxWhizPH mobile app as his brainchild, he was recognized as one of the world’s most outstanding young people, a young CEO in Asia, and one of the ten most outstanding young men in the Philippines due to his advocacy and expertise in tax matters. Currently, he is the President and CEO of the Asian Consulting Group and a 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 [email protected] and download the free TaxWhizPH app if you have any tax questions.

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