BIR closely monitors Airbnb’s tax compliance

The Airbnb logo is shown in this illustration taken on March 19, 2020. – REUTERS / DADO RUVIC

Through Beatrice M. Laforga, Journalist

The BUREAU of Internal Revenue (BIR) has started monitoring the tax compliance of online leasing platforms such as Airbnb, senior officials said.

“We verify and validate payments and Airbnb tax compliance,” said BIR Deputy Commissioner Arnel SD. Guballa said Business world in a Viber message on Thursday, without disclosing further details.

House Ways and Means president and Albay representative Jose Maria Clemente S. Salceda said the BIR already imposed taxes on online leasing platforms, but “was having difficulty enforcing regulations “.

“Airbnb itself said in 2019 that it wanted to contribute revenue. I will continue to work with the BIR to find a satisfactory way to enforce the law on them, ”said Thursday Mr Salceda, who also drafted a bill on digital taxes.

The government is still pushing for taxation of 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,” Dominguez confirmed Thursday when asked if the proposal to tax online leasing services was still on the table.

Without giving details on the target schedule of the plan, Mr. Dominguez reminded companies to register with the BIR for tax purposes as well as with local authorities (LGU).

“All property owners (located in the Philippines) listed on Airbnb (and similar platforms) are part of the BIR call to properly comply with registration requirements as they are real estate lessors,” he said. declared the deputy commissioner of the BIR, Marissa O. Cabreros. said in a separate Viber message.

The office issued Tax Circular No.60-2020 in June last year to remind online sellers to register with BIR. Some 7,262 companies have registered to date.

The government and lawmakers plan to impose the 12% value added tax (VAT) on goods and services sold online after the coronavirus pandemic supported online transactions.

Domestic Bill 7425 or the Digital Transaction Value Added Tax Act aims to impose a 12% VAT on online transactions, including online rental services such as Airbnb. It is still pending in the House of Representatives.

Mr. Salceda said they called Airbnbs “network orchestrators” because they provide the service of connecting customers with service providers and reducing revenue.

“This is clearly a ‘value added’ service that can be taxed,” he said.

“The bill defines them as well as the economic and regulatory space they occupy. However, it was BIR’s recommendation that we focus primarily on selling digital goods and services. But in its current form, there are provisions that can still be applied to leasing platforms ”

However, Mr Salceda said it is difficult to estimate the impact on the sector’s taxation revenues as they have yet to determine the value chain and which taxpayer is responsible for which taxes.

“For now, the use of the VAT registration system for non-residents as part of the digital VAT proposal, and the proposal to make them VAT withholding agents is probably the most effective first step, ”he said.

The DoF estimates up to 17 billion pesos in potential VAT recovery from the digital economy.

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