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The use of the Internet for the promotion of goods and services,
particularly social media (Facebook, Twitter, and Instagram to
name a few), has grown in the recent years. Companies in the
Philippines have resorted to this medium of advertising, as it is
accessible to more Filipinos.
Internet or online advertising has helped increase the revenues of
local companies, be it seller of goods or seller of services, and of
advertising companies. This trend, of course, has caught the
attention of the Bureau of Internal Revenue (BIR) for potential sources of
government revenue.
In 2013, the BIR issued Revenue Memorandum Circular No. 55-2013 (RMC 55-13) which provides for
the definition of, and the tax obligations of persons involved in,
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various online business transactions. As regards Internet or online
advertising, the BIR defined the same as a form of promotion
that uses the Internet to deliver marketing messages to attract
customers. Among others, RMC 55-13 provides for the obligation
Amicus Curiae -- Rodulfo Jose R.
of: 1) the advertising company to issue official receipt; and 2) the Martinez: "Ride-sharing services
advertiser to withhold and remit to the BIR 2% tax. However,
here to stay"
while RMC 55-13 gave fairly detailed rules on the obligations of
online advertising companies and advertisers, it failed to consider
Amicus Curiae -- Kiarra Nastazsa
that most online advertising companies are foreign corporations
Adrienne A. Cabile:"Examining
located abroad.
the proposed extended maternity
Generally, whenever a transaction involves foreign corporations,
the situs of taxation of the income or transaction becomes an
issue. As in the case of Internet or online advertising, the usual
questions are: if all the services of the foreign advertising
companies are performed, and all the facilities used for such
services (i.e., computers, servers, among others) are located,
outside the Philippines, are the service fees taxable in the
Philippines? Does the fact that the online advertisements are
viewable and accessible in the Philippines by the intended
market/customer make the service taxable in the country?
leave"