BIR to tax only major online sellers

MANILA, Philippines — The Bureau of Internal Revenue (BIR) has clarified that it is not going after small online businesses but is instead looking to tax big online shopping platforms and digital services.

During the online Laging Handa briefing yesterday, BIR deputy commissioner Arnel Guballa said the bureau ordered online sellers to register simply to determine the total population of individuals and enterprises earning money through digital platforms.

Guballa explained that the BIR’s order does not aim to increase the tax burden of small players, but rather to get large online businesses such as Lazada, Netflix and Google into the country’s tax net.

“That’s why we are starting the registration of online sellers. We are not pointing at our countrymen who (have) small (businesses), but what we are looking at are the big online merchants or sellers,” he said in Filipino.

He reiterated that online sellers whose earnings do not exceed P250,000 annually are not required to pay income tax.

Sellers with gross receipts of P3 million and below are exempted from the value-added tax (VAT), he said.

As for foreign digital services such as Netflix and Amazon, Guballa said the BIR is preparing a framework that will allow the government to collect VAT from their transactions.

“What the government, the BIR want to collect is the VAT because of the destination principle,” he said. “Because the consumption is here in the Philippines, we can collect the VAT.”

The BIR’s Revenue Memorandum Circular 60-2020 notifies those who do business through digital platforms to register with the tax agency on or before July 31.

It also encourages online businesses to declare and pay the corresponding taxes on past transactions, without penalty, if the declaration and payment are made on or before that date.

The agency warned that all individuals or corporations found doing business without complying with the requirements would be meted with applicable penalties under the law.

Guballa said for now, online sellers would need to endure and go to their respective revenue district offices to complete registration.

But he said the BIR is working on automating its registration system to facilitate and ease the process.

“In the soonest time, maybe around one month or two months, BIR may be able to shift the registration system online,” he said.

‘Postpone online taxing’

Presidential Adviser for Entrepreneurship Joey Concepcion is calling on the government to postpone to next year its requirement for online sellers to register with the BIR amid the coronavirus pandemic

Speaking during the webinar of Viventis and People’s Management Association of the Philippines yesterday, Concepcion said the crisis has created opportunities for individuals to sell through digital platforms and the number of online sellers has been increasing.

“Unfortunately, there is a clampdown for all these people to register, and I am appealing to government to maybe just give them a couple of months since many of them are trying to be an entrepreneur,” he said.

He said many of these individuals have turned to online selling of products as they are out of a job and trying to earn money.

“We should allow these people to continue and then be stricter later on, maybe next year, starting January, ” he said.

The latest move by the BIR is not the first time it is looking into online transactions.

In 2013, the bureau issued RMC 55-2013 to remind taxpayers that online sales are taxable. Louella Desiderio