Tax Bureau to tighten regulations as fintech usage grows, says DOF

ABS-CBN News

Posted at Nov 12 2021 05:22 PM

MANILA— The Bureau of Internal Revenue will strengthen tax regulations for the financial technology (fintech) industry as online transactions continue to gain traction during the COVID-19 pandemic, the Department of Finance said Friday.

"The BIR 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 fintech entities not clearly or explicitly covered by existing regulations," Deputy Commissioner Marissa Cabreros told Finance Secretary Carlos Dominguez.

The DOF said it held a meeting with the BIR last Oct. 21, which mandated the bureau to closely monitor the fintech industry.
 
Cabreros said the BIR would create a team that would evaluate the tax obligations of fintech company activities based on categories issued by the Securities and Exchange Commission and those regulated by the Bangko Sentral ng Pilipinas (BSP.)

BIR's Large Taxpayers Service (LTS) unit will also look into activities that are variations of existing businesses and validate if correct taxes are being paid, she said. 
 
According to the SEC, fintech firms are those that cover operations, issuers and service providers of electronic payments, alternative credit scoring companies, online lending firms, digital banks, virtual asset service, play-to-earn platforms, crowdfunding platforms, big data companies, digital advisers and insurance technology firms, among others.

Cabreros said the country's tax laws governing financial institutions should also apply to fintech companies which therefore should pay income tax, value-added tax (VAT), business tax or gross receipts tax and documentary tax stamps when applicable.

Registration profiles of existing fintech firms are currently being validated to encourage non-compliant ones to register and pay taxes, the BIR said.

“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 online payments, lending apps and other digital financial services accelerated during the COVID-19 pandemic when cashless payments were preferred to reduce the risk of infection.

The BIR is also targeting social media influencers, who earn from their posts or other forms of businesses online, who are not paying correct taxes.

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