The growing popularity of electronic commerce following the lockdown has turned government’s attention to the need to legitimize, if not regulate, operations of online sellers.
The Bureau of Internal Revenue (BIR) has given online sellers until July 31 to register their businesses and to declare and pay taxes for past transactions by the said date, with no penalties, as the government moves to raise more revenue amid the coronavirus disease 2019 (COVID-19) pandemic.
In Congress, House Bill (HB) No. 6122 or simply known as the internet transactions act has been filed for the purpose of regulating e-commerce to protect consumers against scammers.
The BIR issued revenue memorandum circular (RMC) no. 60-2020 dated June 1, 2020 to give due notice to persons doing business, specifically those who are into digital transactions, to ensure their businesses are registered and they are tax compliant. Sellers are also encouraged to voluntarily declare their past transactions subject to pertinent taxes and pay the taxes.
The BIR said those found doing business beyond July 31 yet remain unregistered or unable to update their requirements, and those who fail to settle unpaid taxes will be imposed with applicable penalties.
The BIR said these shall include, not only partner sellers/merchants, but also other stakeholders involved, such as the payment gateways, delivery channels, internet service providers, and other facilitators.
As early as 2013, the BIR has reminded taxpayers about their obligations in relation to online business transactions.
“The existing tax laws and revenue issuances on the tax treatment of purchases (local or imported) and sale (local or international) of goods (tangible or intangible) or services shall be equally applied with no distinction on whether or not the marketing channel is the internet/digital media or the typical and customary physical medium,” the BIR said via RMC 55-2013, dated August 5, 2013.
The Department of Finance is also looking at how to better capture value added tax (VAT) leakages from online transactions.
Rowel Barba, director-general of the Intellectual Property Office of the Philippines, said the agency endorses HB 6122 adding that e-commerce platforms need to take additional actions to combat trafficking of counterfeit and pirated goods and reduce, if not eliminate, the availability of such goods on their platforms.
In a statement, Barba said, there is also a growing concern about the proliferation of counterfeits in social media platforms such as Facebook.
Barba asked the committee to consider including in the bill the adoption by online sellers of best practices that include a comprehensive terms of service agreements, vetting of third-party sellers, limitations on high risk products like medicines, among others.
Senators Risa Hontiveros and Joel Villanueva yesterday called on the government to prioritize the collection of unpaid taxes from Philippine offshore gaming operations before taxing online sellers.
Villanueva credited the entrepreneurial spirit of online sellers for defying the odds and trying to survive through the different things they hawk on social media and shopping apps.
Villanueva also called on the BIR to intensify its information campaign to encourage micro, small, and medium enterprises to register with the BIR, the benefits of doing so and the taxes applicable to them.
Under the Tax Reform for Acceleration and Inclusion Law, a sole proprietorship earning P250,000 or less is not subject to tax.