The Philippines is crafting a mechanism to collect the 12-percent value-added tax (VAT) from goods and services being provided by multinational digital platforms such as Amazon and Netflix, Department of Finance (DOF) officials said on Wednesday.
“What we’re doing right now is a phased approach on how we’re going to implement taxation of online platforms and sellers. Right now, the focus is on the local online sellers—those are the ones who have to register,” Finance Undersecretary Antonette Tionko told an online forum, referring to the Bureau of Internal Revenue’s (BIR) recent circular ordering still unregistered online stores to do so on or before July 31.
DOF and BIR officials had explained that the first step in digital taxation amid this COVID-19 “new normal” of doing business was mandatory registration as all businesses—whether brick-and-mortar or online—needed to be registered as taxpayers under the Tax Code.
Finance Secretary Carlos Dominguez III noted that whether or not online sellers would be paying any tax “depends on their specific circumstances.”
“Because of the TRAIN [Tax Reform for Acceleration and Inclusion] law, online businesses making no more than P250,000 in profit per year will be tax-exempt. The sellers selling less than P3 million a year will be exempted from VAT. The rules as they stand were legislated by Congress and are reasonable and fair,” Dominguez said. —Ben O. de Vera