Tax regulations

BIR strengthens fintech tax regulations


MANILA – The Bureau of Internal Revenue will tighten tax regulations for the financial technology (fintech) sector as online transactions continue to gain traction during the COVID-19 pandemic, the finance ministry said on Friday.

“The BIR will continue to gather information and knowledge from other regulatory agencies on the identification, resolution and reduction of gaps resulting from the development and proliferation of fintech entities that are not clearly or explicitly covered by the existing regulations, ”Deputy Commissioner Marissa Cabreros told Finance Secretary Carlos. Dominguez.

The DOF said it held a meeting with the BIR on October 21, which mandated the office to closely monitor the FinTech industry.

Cabreros said the BIR will create a team that will assess the tax obligations of the activities of FinTech companies 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 at activities that are variations of existing businesses and validate whether the correct taxes are being paid, she said.

According to the SEC, FinTech companies are those that cover operations, issuers and providers of electronic payments services, alternative credit rating companies, online lending companies, digital banks, banking services, etc. virtual assets, gaming platforms to win, crowdfunding platforms, big data companies, digital advisors and insurance technology companies, among others.

Cabreros said the country’s tax laws governing financial institutions should also apply to FinTech companies which would therefore have to pay income tax, value added tax (VAT), business tax or tax. on gross receipts and documentary tax stamps, if applicable.

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

“We will guide you in paying the correct taxes. Tax evasion is a criminal offense, don’t wait until you get caught to avoid facing criminal charges and significant penalties, ”said BIR Commissioner Caesar Dulay.

The adoption of online payments, loan 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 make money through their posts or other forms of online business, who do not pay taxes properly.

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