MANILA, Philippines — Upon prodding by lawmakers, the Bureau of Internal Revenue (BIR) expressed openness to extend the deadline and drop fees for online sellers who would register their businesses as the agency brings tax collection to the Web.
“We will study that. Before the deadline comes up, we may issue another memorandum circular,” BIR Commissioner Caesar Dulay told a hearing of the House ways and means committee on Friday.
In the same hearing, Dulay said the bureau “will look” into the possibility of waiving the P500 registration fee for online sellers who would come forward to apply for a tax identification number. As it stands, the fee is uniformly charged against self-employed individuals applying for before the BIR.
The requests for leeway were the most legislators belonging to Albay Rep. Joey Salceda’s committee can do for now after a public backlash over BIR’s Revenue Memorandum Circular (RMC) 60-2020, which asked firms earning income through “electronic platforms” to register for tax purposes by July 31.
“Maybe we can include abatement on the memorandum so that those online sellers will have an incentive to register,” Marikina Rep. Stella Luz Quimbo said. By law, taxes paid past due are charged 20% interest and 25% surcharges, but the BIR chief is granted power to waive them.
While BIR reiterated that the circular is not meant to run after online sellers failing to register after July 31, BIR Deputy Commissioner Arnel Guballa also admitted that the tightened watch on e-commerce was a consequence of the pandemic’s push to bring more consumers and businesses online.
BIR was already ahead of this when under the previous administration the agency issued RMC 55-2013, but only as a reminder to online vendors to become tax registrants. With a deadline to register stipulated under RMC 60-2020, Dulay hopes to bring more online players to the tax fold.
“This became very important because of the deluge of online sellers,” Dulay said.
BIR currently has no idea how many online sellers are there or how much revenues can be collected from them. In contrast, as per trade department data, there are 1.5 million online vendors registered as businesses, Trade Secretary Ramon Lopez said in the same hearing.
VAT first, income tax later
For his part, Finance Assistant Secretary Dakila Napao said BIR and its mother agency, the finance department, are currently up to “capture” value-added taxes from online purchases. Income levies on vendors would come next.
“We are requesting online firms for alpha list of all their sales. That is being considered. These lists will be processed by the information group of the BIR, say, they will do some matching. That is just part of the many steps (we are taking),” Napao explained.
BIR’s shift to collecting taxes from e-commerce came as the government struggles to raise revenues to fund an expensive pandemic response. From January to May, preliminary data showed BIR collections dropped 27.1% year-on-year to P664.74 billion.
The tally beat the downwardly revised target of P648.69 billion for the five-month period, but 40% below the original goal of P1.11 trillion.
With the expectation of lower revenues as most economic activity remained restrained, BIR slashed its collection target anew this year to P1.74 trillion from the original P2.58 trillion.