The BIR will strengthen tex regulations as fintech usage grows, according to DOF.
DOF — The Department of Finance said on Friday that the Bureau of Internal Revenue (BIR) will strengthen tax regulations for the financial technology (fintech) industry as online transactions continued to gain traction during the pandemic.
Revenue Deputy Commissioner Marissa Cabreros recently told Finance Secretary Carlos Dominguez that the tax bureau will continue to gather information and knowledge from the other regulatory agencies on identifying, addressing, and closing the gaps resulting from the development and proliferation of financial technology companies not clearly or explicitly covered by existing regulations.
The Department of Finance said that it held a meeting with the tax bureau last October 21, which mandated BIR to closely monitor the financial technology industry.
According to Cabreros, the tax bureau would create a team that would evaluate the tax obligations of financial technology company activities based on categories issued by SEC (Securities and Exchange Commission) and those regulated by BSP (Bangko Sentral ng Pilipinas).
Cabreros also said that the tax bureau’s Large Taxpayers Service (LTS) unit will also look into activities that were variations of existing businesses and validate if correct taxes were being paid.
In addition, Cabreros said that the country’s tax laws governing financial institutions should also apply to financial technology companies which therefore should pay value-added tax (VAT), business tax or gross receipts tax, income tax, and documentary tax stamps when applicable.
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The tax bureau added that registration profiles of existing financial technology companies were currently being validated to urge non-compliant ones to register and pay taxes.
“We will guide you in paying correct taxes. Tax evasion is a criminal offense, please do not wait for you to be caught to avoid facing criminal charges and substantial penalties,” BIR Commissioner Caesar Dulay said.
The adoption of lending apps, online payments, and other digital financial services accelerated during the pandemic when cashless payments were preferred in order to reduce the risk of coronavirus infection.
Also, the tax bureau was targeting social media influencers, who earned from their social media posts or other forms of businesses online, who weren’t paying correct taxes.
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