BIR: Ambulant vendors are exempt from taxes

CEBU, Philippines - They are mostly seen walking around, shouting and selling their products to motorists, passengers and people on the streets and sidewalks amid the traffic, pollution, heat of the sun and noisy car horns.

What they are doing all day, they say, is a humble and small business that helps them make ends meet and survive the complex and noisy life in the city.

They are the ambulant vendors who relentlessly battle the physical rigors of the job with the sincere purpose of making money to survive in the urban life.

They are mostly seen carrying all sorts of wares such as a ‘case’ of bottled water, cigarettes, peanuts and candies while following and encouraging pedestrians to buy their products.

Like any other people who are engaged in trading and other economic activites and pay their tax obligations to the government, but how about those involved in ambulant vending? Do they pay taxes? What kind of  tax?

According to the Bureau of Internal Revenue in Cebu, the agency has not required these vendors to file and pay income tax returns because generally their earnings are lower than what the government requires to compel them, a BIR official told The FREEMAN.

Direct and indirect tax

“Yung exemption ng gobyerno na P50,000 ay mas malaki kaysa kinita ng mga ambulant vendor,” said Manuel M. Mapoy, the assistant regional director of BIR Cebu, “so they are not required na magbayad na sa income tax.”

The people who are obliged to pay the income (direct) tax are those who have an annual income of at least P50,000 which is the bureau’s basic personal exemption, he explained.

Mapoy said the perception of the people is that these vendors, specifically the ambulant, should not be obliged to pay direct tax to the government considering the nature of their business and their income.

However, Mapoy noted the bureau does not fully believe that most of them are earning less: “Hindi lang talaga namin sila ma-saturate.”

“Maybe most of them are making no less than P1,000 a day,” he said, adding that if this amount is multiplied by 365 days in a year (which amounts to more than P300, 000), it would show that they are actually earning more than the tax exemption ceiling required by the bureau.

He then noted, “If you’re earning that amount, therefore you’re supposed to file and pay.”

BIR’s Mapoy although said that everyone living in the Philippines are required to pay the correct taxes either directly or indirectly and it all depends on how much a person is earning which is basically the basis whether he should pay the direct tax or income tax.

In the case of ambulant vendors and other small enterprising people, they pay taxes to the government through the value-added tax or VAT which is a form of sales tax.

It is an indirect tax on consumption charged on the sale of goods and services and even on the imports of goods and it can be applied to all kinds of buyers.

“Alam mo sila ay nagbabayad ng tax sa gobyerno indirectly,” he explained, “kasi lahat naman tayo nagbabayad sa oras na bumili ka ng bigas, dry goods, canned goods, damit o ano man yan.”

‘Just enough to feed ourselves’

The FREEMAN intentionally asked how much a typical ambulant trader really earns in a day and how this ‘walking store’ business meet the daily expenses of the people who are highly dependent on it.

Jim Mendoza,59, a resident of barangay Pardo in Cebu City, is just one of the many ambulant traders who roam around the commercial areas in the city bringing some products with them to sell to walk-in customers.

He has been selling cigarettes for a couple of years now mainly along Leon Kilat Street in the downtown area, earning a maximum of   P400 a day.

During lean days, he could only bring home P200, just enough for his basic needs such as food and water.

He is living alone in the city because he is separated from his family who resides in Manila: “Nagpuyo ra ko kauban ang akong mga amigo sa Pardo.” (I live with my friends in Pardo).

He started vending with a capital of P1,000 from his savings from his previous job as a car dispatcher.

The highest earning ambulant vendors are those who sell cigarettes or candies because of the high demand from smokers, vendors said.

Vendors normally transfer from one place to another and search for the best vending place where foot traffic is heavy to make sure they could earn more than expected.

Influx of ambulant sellers is always expected to rise during community celebrations such as procession, fiesta, mass, rally, among others. They are also seen outside schools, offices, malls, in public markets and other institutions.

Despite her age of 75, vendor Dorothea Montecillo, already a widow, is still able to endure the challenging work with her relentless spirit to earn to meet her needs.

Montecillo, who used to work as health worker in her barangay, is selling cigarettes and candies to call center agents, other employees and residents along Archbishop Reyes Avenue in Cebu City.

Although she rarely receives money from her nine children who already have their own respective families, she said as much as possible she does not want to become dependent on them but rather work to help herself.

Her  income of  P200 - P600 is her source for food and water expenses. Every day, she sets aside P50 for the electricity cost she is paying.

Ambulant vendors usually source their products from retail stores through wholesale. Like in most cases in retailing, a profit margin of 20% is generally added to the price to gain income.

Entrepreneurs/vendors whether small or big are vital aspect in sustaining economic development because these walking vendors also contribute to the retail industry.

They admit that life on the streets is hectic and dangerous, but for the longest time they are already accustomed to it, believing that “this job is better than none.”  (FREEMAN)