BIR to online sellers: Register, pay taxes

MANILA, Philippines — With more Filipinos doing business online, the Bureau of Internal Revenue (BIR) is now requiring online sellers and those making money through digital platforms to register with the tax agency and pay the necessary taxes.

Internal Revenue Commissioner Caesar Dulay announced the new requirement through Revenue Memorandum Circular No. 60-2020, dated June 1, 2020.

Malacañang, through presidential spokesman Harry Roque, said it is in favor of the move, but stressed that those earning below P250,000 yearly should be exempted.

“This circular is issued to give due notice to all persons doing business and earning income in any manner or form, specifically those who are into digital transactions through the use of any electronic platforms and media, and other digital means, to ensure that their businesses are registered pursuant to the provisions of Section 236 of the Tax Code, as amended, and that they are tax compliant,” the circular read.

The order covers sellers and merchants as well as other stakeholders involved in digital transactions, such as payment gateways, delivery channels, internet service providers and other facilitators.

The BIR said online sellers and other digital service providers may register until July 31.

“Likewise, they are encouraged to voluntarily declare their past transactions subject to pertinent taxes and pay the taxes due thereon, without corresponding penalty, when declared and paid on or before the said date,” it added.

The BIR warned that all individuals or corporations found later on to be doing business without complying with these requirements would be meted with applicable penalties under the law.

Newly registered business entities, including existing registrants were also enjoined to comply with other requirements, including issuance of sales invoice or official receipt; maintenance of books of accounts and other records of business transactions; withholding of taxes, if applicable; filing of required tax returns; and payment of correct taxes on time.

The BIR’s order comes at a time when digital transactions have become more in demand amid the community quarantine set in place by the government to check the spread of coronavirus disease 2019 (COVID-19).

Earlier, Finance Secretary Carlos Dominguez said the accelerating shift to digital transactions has made it crucial for the government to set up a tax regime for the digital economy.

He said the Department of Finance and the BIR are studying ways that would allow the government to collect value added tax (VAT) on digital transactions, both local and cross-border.

Albay Rep. Joey Salceda, who chairs the House ways and means committee, has filed House Bill 6765 or the digital economy taxation bill, which seeks to impose taxes on streaming sites and other digital services.

Dominguez said the DOF would need to study the bill “very carefully” considering the transnational nature of most digital transactions.

He also noted that the government cannot just impose digital services tax without an international agreement on cross-border transactions.

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