Online sellers told: DTI registration only for regulation

MANILA, Philippines — Existing and prospective online sellers need not worry about registering with the Department of Trade and Industry (DTI) as the requirement would only be for regulatory purposes, a lawmaker said yesterday.

“The DTI encourages registration of online businesses to ensure consumer protection and to build trust and confidence in the use of these online platforms,” Rep. Wes Gatchalian, chairman of the House committee on trade and industry, said.

He said registering with the DTI is just for “regulation purposes and does not mean they will automatically be taxed” by the Bureau of Internal Revenue (BIR).

Gatchalian said his proposal to regulate online transactions through House Bill 6122 “should not be taken as a barrier to business, but an opportunity for growth in terms of access to government programs and incentives.”

“By legitimizing one’s business through registration, it becomes eligible to avail of loans, subsidies and tax breaks from the DTI and other government agencies,” the senior administration lawmaker stressed.

Gatchalian added his bill also seeks to exempt newly registered micro-enterprises from all national and local taxes for the first two years of operation. “We are giving this incentive so that we can attract these unregistered micro enterprises to register with the DTI,” he said.

The legislator stressed that while he supports the initiative of the Department of Finance through the BIR to demand registration for tax collection measures, the latter’s mandate is “distinct and separate” from that of the DTI.

The BIR issued Revenue Memorandum Circular 60-2020 on June 1 ordering businesses earning income “through the use of any electronic platforms and media, and other digital means” to register and settle taxes on or before July 31.

The tax agency warned that online merchants who fail to meet the deadline would incur penalties.

In 2013, BIR issued RMC 55-2013 reminding taxpayers that online sales are taxable, but only the latest circular imposed a deadline to settle these taxes and warned that surcharges may apply.

At Malacañang, presidential spokesman Harry Roque said taxing online sellers is not an idea of the Duterte administration.

“We understand that life is hard. But this policy is not new,” Roque said at a press briefing, noting this dated back to the revenue commissioner of the previous administration. 

“This policy to tax online sellers started during the time of Kim Henares, the BIR commissioner during the time of President (Benigno) Noynoy Aquino (III). We are just implementing the instruction and the law initiated by President Aquino,” he added. 

Roque went on to cite the Tax Reform for Acceleration and Inclusion (TRAIN) law, which exempts those earning an annual taxable income of P250,000 and below from paying personal income tax.?“What is new is it’s only now that those who are earning up to P250,000 are paying zero income tax. That is because of the TRAIN that was passed as an administration-certified bill during the time of President Duterte,” the Palace spokesman said.

Virtual training

As more Filipinos have resorted to online business largely due to job loss, Sen. Joel Villanueva said concerned government agencies should provide the necessary interventions to raise the skills of online sellers by providing virtual training on essential and entrepreneurial skills.

“What the government must do is to provide enough online resources so that they can upgrade their entrepreneurial skills and be knowledgeable in proper handling and storage of food, and financial management, among others, to make their businesses sustainable,” he said.

“If we help them (online sellers) through training, our countrymen will no longer rely on aid, and the government can focus on addressing other problems created by the pandemic,” he said.

While self-employed individuals earning P250,000 and below are exempted from income tax, he said online sellers – especially those who do not have a background in bookkeeping – might need to hire someone who can handle regular filings, thus entailing additional administrative cost.

He said while he welcomes the BIR’s decision on Friday to waive the requirement on obtaining a mayor’s permit to encourage registration of online sellers, they still need to register with the DTI for sole proprietorship or with the Securities and Exchange Commission for corporations.

He reiterated the priority is to go after businesses, which have long dodged their tax obligations such as Philippine offshore gaming operators (POGOs) that owe the government at least P50 billion in taxes.

He said in ordinary times, taxing online sellers would be just fine. “But right now, we have a pandemic and everyone is just trying to survive. We should encourage these online sellers so they can thrive and contribute to economic activities,” Villanueva said.

Sen. Francis Pangilinan described the BIR’s move to tax online sellers amid the pandemic, and rising unemployment and poverty as “insensitive, unjust, and heartless.”

“Before the government thinks of what to squeeze out of ordinary people trying to do business like online sellers, it should think first what help has it extended to help them,” Pangilinan said.

He said he finds it puzzling that government is targeting those making a decent living amid an economic crisis.

“Government should instead train its sights on smugglers and big tax evaders such as POGOs,” he said. Paolo Romero, Alexis Romero, Cecille Suerte Felipe