MANILA, Philippines — Nearly 5,000 online sellers have so far registered with the Bureau of Internal Revenue (BIR) since taxmen started asking them to pay taxes or risk getting penalized.
From June to Aug. 7, a total of 4,961 online merchants secured tax identification numbers from the tax bureau, with around three weeks left before the extended deadline lapses, BIR Deputy Commissioner Arnel Guballa said in a text message on Thursday.
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Apart from tax registration, BIR Revenue Memorandum Circular 60-2020 also mandated online vendors to settle corresponding taxes for their past sales. When asked about taxes paid so far by online sellers, Guballa said he did not have the data ready.
But for Eleanor Roque, tax principal at P&A Grant Thornton, an auditing firm, the taxes collected from these taxpayers may not be sizable. “Most of them are probably small business and covered by exemptions,” Roque said in a Viber message.
In June, BIR released memo reminding online businesses that by law, they are required to pay sales and income taxes and initially gave them until end-July to do so, or risks getting slapped with hefty penalties.
The deadline was extended by a month, following appeals from lawmakers who shared public dismay over BIR’s plan to tax online firms at a time brick-and-mortar businesses are closing shop due to the pandemic and are struggling to bring their livelihood online to earn a living.
On the part of the taxmen, the focus on online ventures was intended to recoup revenue losses from economic activity that have mostly shifted to the World Wide Web. From January to June, BIR collections went down 10.3% year-on-year to P956.4 billion, also 2.5% below the already lowered target, Treasury data showed.
For Roque, the challenge for BIR does not stop with getting online firms included in the tax base. “The success is in making the online sellers aware of their responsibility to register and pay the correct taxes,” she said.
Bringing more online firms to the fold will also remain a challenge. At nearly 5,000, taxpaying online enteprises are not even half the more than 60,000 online ventures recorded with the trade department.
On the part of the taxpayers, Roque said getting taxed mean the additional burden of keeping your financial books clean.
“Once they are registered, they (online sellers) have to file tax returns whether or not they have income... So now, they must be very careful and comply with the rules of the BIR,” she said.
“They should know how to keep their books and records as those are the basis for their declarations,” she explained.
The push to widen the tax net to online vendors does not stop at the Executive department. Over at the House of Representatives, a bill seeking to slap 12% value-added taxes on online subscriptions such as that in Netflix and Lazada passed the committee level late last month. When enacted, the measure is seen to generate P10.6 billion in revenues on its first year of enforcement.
“For BIR to get sizeable collection, they can audit the big online sellers to check their respective tax compliance,” Roque said. “The BIR will check these records if and when the online sellers are audited.”
BIR is the national government’s biggest revenue-raising agency, accounting for 80% of annual tax revenues. For this year, the bureau is tasked to collect P1.74 trillion.