MANILA, Philippines — The government on Saturday shifted its approach toward online sellers not yet registered with the Bureau of Internal Revenue (BIR).
From outright insistence, it now offers them enticements like financial aid during a national crisis, such as the COVID-19 pandemic to encourage them to list up their small businesses.
“Registering with the Bureau of Internal Revenue not only helps the government generate additional revenue for its various projects — joining the formal economy also ensures that these businesses and their employees are eligible for government assistance programs,” Finance Secretary Carlos Dominguez III said.
He said such perks were available only to those who register their businesses and pay taxes like ordinary brick-and-mortar shops.
Wage subsidy
For instance, small businesses registered with the BIR and the Social Security System (SSS) could avail themselves of the small business wage subsidy (SBWS) program, he said.
Dominguez was referring to the P51 billion in subsidies to over 3 million workers of small and medium enterprises (SMEs), which had been unable to pay their employees during the enhanced community quarantine (ECQ) imposed on Luzon and other parts of the country.
SBWS beneficiaries are qualified to receive P5,000 to P8,000 a month for two months only if their employers had been faithfully paying corporate income taxes and remitting their employees’ withholding taxes and SSS contributions.
Only registered businesses may get government loans under the COVID-19 assistance to restart enterprises (Cares) program of the Department of Trade and Industry, he added.
Specific factors
Dominguez said the BIR’s Revenue Memorandum Circular No. 60-2020, which set a July 31 deadline for online stores to register and pay the correct taxes, was “part of the government’s efforts to implement a tax collection program on digital transactions” for both goods and services.
How much taxes these online sellers will be told to pay “depends on their specific circumstances,” he said, pointing out that the rates for self-employed individuals had gone down since the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act in 2018.
“For instance, a seller earning less than P250,000 will be subject to zero income tax,” he said. “In fact, for value-added tax (VAT) purposes, they will be exempt from VAT if their gross receipts do not exceed P3 million.”
Under the Tax Code, businesses that fail to register with the BIR can be closed for not less than five days. The closure order can be lifted “only upon compliance with whatever requirements prescribed by the [BIR] commissioner in the closure order.”
But Dominguez said those who may be found with unpaid tax obligations prior to this year would “certainly can be covered by a general tax amnesty—that is why we are still asking Congress to pass the legislation on tax amnesty.”
Last year, President Duterte signed Republic Act No. 11213, or the Tax Amnesty Act of 2019, which paved the way for the ongoing amnesties on delinquencies and estate taxes.
But the President had vetoed RA 11213’s general tax amnesty provisions, which Dominguez defended.
He said giving a chance to taxpayers to settle their past liabilities without safeguards “would only lead to revenue losses for the government and encourage tax evasion.”
Benedicto Yujuico, president of the Philippine Chamber of Commerce and Industry (PCCI), said his group was backing the BIR.
“The money we use for social amelioration funds to recover, for example, are funded by loans. We need to pay these and we need sources of revenue, so these online businesses must register,” Yujuico said during Saturday’s Laging Handa briefing.
The government, in turn, will help online businesses, he said.
“So I hope those starting online businesses will appreciate this and won’t hesitate to register their businesses and pay VAT and taxes due from selling products online,” Yujuico said.
Online sellers and several lawmakers had protested against forcing the small internet entrepreneurs to register with the BIR, saying it was ill-timed since many of these businesses were struggling to survive amid the economic crisis.
—With a report from Leila B. Salaverria and Mar S. Arguelles