BIR going after Airbnb and other staycation hosts

The taxman is running after Airbnbs or short-term property rentals which have not been paying taxes, Finance Secretary Carlos Dominguez III said on Thursday.

In a message to reporters, Dominguez pointed out that Airbnb operators or hosts were engaged in taxable transactions. As such, he said a check on the tax compliance of these rental businesses had to be done immediately.

Last year, the Bureau of Internal Revenue (BIR) reminded online businesses to register as taxpayers and pay their dues, as mandated under a 2013 regulation issued by former BIR chief Kim Jacinto-Henares.


Obligation to pay tax

The reminder was made amid the pandemic-induced recession which weakened the government’s tax and nontax revenue collection amid ballooning expenses for COVID-19 response.

“It’s the obligation of all online businesses to register with the BIR and their respective LGUs (local government units),” Dominguez said.

Sought for more details, Internal Revenue Deputy Commissioner Marissa Cabreros said “all property owners located in the Philippines which are listed on Airbnb [and other similar platforms] are part of the call of the BIR to properly comply with the registration requirement.”

“They are lessors of real property,” Cabreros noted.

Internal Revenue Commissioner Arnel Guballa separately confirmed that they were “currently checking Airbnbs,” but he was still validating data on how many of these rental businesses were BIR-registered or not to date.

Prepandemic, the BIR considered Airbnbs as a potential new source of additional revenue for the government.

Cabreros told the Inquirer in an interview in 2019 that Airbnb rentals might indeed be cheaper than the rates of traditional accommodation facilities as some of them might not be paying the correct taxes.

However, Cabreros back then admitted that going after Airbnbs might be a challenge.


Challenging task

For one, Airbnb had yet to require formal business registration from their leasing partners and advertisers, Cabreros had noted.

“On Airbnb, you can lease your personal property. In that aspect, it’s difficult to monitor all of the advertisements there and check if they had declared income tax,” she had said.

“So we only have estimation—we could impute that [Airbnb rentals] income. But as to actual [incomes], these are things that are a challenge to tax administration,” Cabreros had said, adding that this could mean the BIR needed to research if registered properties were being leased online.

It also doesn’t help that some Airbnb unit owners hire third parties to manage their bookings—making it difficult to track down the taxpayer responsible for paying income and leasing taxes due.