BIR Wants Online Sellers To Register Businesses By July 314 min read
- The Bureau of Internal Revenue (BIR) wants online sellers taking advantage of the pandemic to register their businesses by July 31, 2020.
- Aside from registration, the tax agency also wants them to declare their sales prior to registration.
- Sellers who will not comply with the BIR guidelines on or before June 31 may be slapped with a penalty.
The BIR now has trained its sights on a new group of people: online sellers who try to make an honest living during the quarantine.
In their most recent memorandum, the agency obligated merchants who conduct their businesses through digital platforms to ensure tax compliance due with the current revenue regulations.
According to BIR Revenue Memorandum Circular No. 60-2020: “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.”
Aside from online sellers, the memorandum also covers “stakeholders involved such as payment gateways, delivery channels, internet service providers, and other facilitators.”
For newly registered entities with the BIR, the memorandum reminded them follow these guidelines in line with the National Internal Revenue Code (NIRC):
- Issuance of registered sales invoice or official receipt for every sale of goods or services to clients, customers, or buyers
- Keeping of registered books of accounts and other accounting records of business transactions
- Withholding of taxes, as applicable
- Filing of required tax returns
- Payments of correct taxes due on time
The top tax collecting agency also wanted them to “voluntarily declare their past transactions subject to pertinent taxes and pay their taxes due thereon.”
BIR sets deadline for online sellers
The tax agency set a deadline of July 31 for both registration and declaration of previously unregistered earnings is on July 31. For online sellers, failure to comply with their regulation before the deadline will mean fines, jail time, and interests based on the penalties on Title X of the National Internal Revenue Code.
The ruling from BIR came after the rise of online sellers as a means for Filipinos to make ends meet during the quarantine. On Facebook Marketplace, for instance, one can find people trying to hawk their products ranging from “new normal” necessities such as masks and alcohol to trendy food items like baked sushi and ube cheese pandesal.
If you don’t want the BIR to be hounding you over unpaid taxes, here’s a step-by-step guide to BIR, DTI, and Securities and Exchange Commission (SEC) registration.
BIR to online sellers: Sealing the gap?
Just recently, BusinessMirror reported that revenue collection for April missed their ₱735.03 billion target even with the combined efforts of the BIR and the Bureau of Customs (BOC).
The Department of Finance (DOF) reported that the revised April revenue only hit ₱706.85 billion, which is almost four-percent amiss of the month’s target. However, this is peanuts compared to last year when the April collection for both agencies reached a little over ₱900 billion.
Because of debilitated industries, the government wants other ways to seal the gap in collections, with the following digital economy taxation measures and the like studied:
- Finance Secretary Carlos Dominguez III said they’re looking at proposals to impose value-added tax on streaming services and make online marketplaces agents of the government for withholding taxes
- The infamous “Netflix tax,” “Facebook tax,” and “Lazada tax,” were filed by Albay Representative Joey Salceda in the lower chamber and Senator Bong Revilla on the upper chamber
- Higher taxes on sugar-sweetened beverages and junk foods high on trans-fat and sodium, which was backed by government tax think tank National Tax Research Center
Although the government said that more ways to fill up the national coffers will be used to continue the projects of President Rodrigo Duterte, as well as funding continuing efforts to curb the spread of COVID-19, ultimately the burden of cost will still be on the shoulders of ordinary Filipinos.
Is there hope for digital merchants?
After the BIR circular drew firestorm for ordinary Filipinos, the Malacañang allayed the fears of the public by saying that low income-earning online businesses can be exempted from taxes.
According to Presidential Spokesperson Harry Roque, online sellers with an annual income of ₱250,000 or less are exempted from paying their taxes under the law.
“If your online business net income does not exceed ₱250,000, eh wala po talaga kayo ibabayad,” Roque said.
In addition to tax-exempt status of some sellers, the DOF also urges the legislators to quickly pass the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, a corporate tax reform measure that will stimulate the economy due to tax cuts across the board.
Aside from making the country lucrative for investors, corporate tax cuts will also give micro, small, and medium enterprises the much-needed relief they need to stay afloat during and after the pandemic.
Dominguez clarified that CREATE Act is “clearly not an effort to raise taxes as it will be decisively revenue-negative.”
“The large and immediate rate cut in the second half of 2020 also sends a strong signal to the world that the Philippines is positioning itself as a premier investment destination for companies that are looking to diversify their supply chains,” he added.