The Bureau of Internal Revenue, known as BIR, now requires online sellers and other businesses perusing through digital economics or electronic means for their compliance to register their businesses, past activities, and the settlement of their transactions for taxation purposes on or before July 31.
According to the Circular, this will require people who are earning income, in any manner or form, to pay their taxes due depending on the amount that they own. This Memorandum Circular (M.C.) has been dated since June the 10th and it shall be effective any time within next month.
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.”
Who Are Included?
People and businesses who would be included in these would be those who are partner sellers or merchants, but also other stakeholders such as payment gateways, delivery channels, internet service providers, and other facilitators.
The same as that, they would also be urged to declare past transactions that are subject to pertinent taxes. In addition to that, they should be on or before the date that has been assigned and appointed to.
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.”
Due to the recent outbreak of the coronavirus (COVID-19) pandemic, there has been an increase of people participating in online shopping activities like the buying and selling of products as people are forcibly ordered to stay at home, the reason why the call for online sellers to register businesses heighten.
However, the taxpayment body added that online sellers to register business transactions and/or update their registration status on or before July 31 shall not be meted out with penalty for late registration. Meanwhile, those who fail to comply shall be imposed applicable penalties under the law and existing revenue rules and regulations.
Online Sellers to Register Businesses Voluntarily
In addition to that, they also are encouraging sellers to voluntarily register their previous activities, and that applicable taxes will be subject to past transactions. As per the BIR memorandum, in general, the registration and its updates are to be proceeded with in the Revenue District Office (RDO) having jurisdiction over the place where the Head Office is located or over the place of residence of the individual taxpayer.
The tax-collecting body advised newly-registered businesses to follow the Tax Code’s provision as amended and other relevant issuance on tax revenue as ruled in the circular such as:
- 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
Not only is it expected for online sellers to register businesses, but streaming services as well especially when Finance Secretary Carlos Dominguez III has previously revealed that the Department of Finance (DOF) is now reviewing how to impose taxes on digital activities such as online sales and streaming services.
We have started the study on improving our tax collections on video streaming, on commerce conducted through the internet. What we are trying to figure out is how we can implement a tax collection program, so now our team from the BIR and the DOF is working very hard to determine the way to tax transactions that are supposed to be taxed but are escaping taxation because they are on the internet.”
Tax Application on Digital Services
House Committee on Ways and Means chair Joey Salceda previously this week filed a measure seeking for tax application on digital services while Senator Ramon Bong Revilla Jr. last Wednesday bared that he has done so accordingly as well.
Meanwhile, Sen. Imee Marcos countered, saying that the proposal for taxation of online transactions is untimely with the COVID-19 pandemic and could possibly nip several arising economic opportunities.
The announcement of BIR for online sellers to register business followed after mere days the Department of Trade and Industry (DTI) told online sellers to be transparent with the prices of their products instead of having interested buyers to message the sellers as products being sold without price tags may be considered as profiteering.
So far as adding to say Price Act, Republic Act No. 7394 or the Consumer Act states that “it shall be unlawful to offer any consumer product for retail sale to the public without an appropriate price tag, label or marking publicly displayed to indicate the price of each article and said products shall not be sold at a price higher than that stated therein and without discrimination to all buyers.”
What do you think about the BIR’s plan of adding taxes for these online businesses and services? Do you think that it’s just right for them to do so?