DTI wants 3-year tax exemption for small online businesses in new bill

The Department of Trade and Industry (DTI) is pushing for a three-year tax exemption period for small e-commerce enterprises as part of a proposed legislation to encourage online merchants to register with the government.

DTI Assistant Secretary Mary Jean Pacheco said on Monday this was one of the provisions they were introducing in the proposed Internet Transactions Act, which was tackled at the hearing of the Senate committee on trade, commerce and entrepreneurship.

“It will also encourage them to register and take care of their businesses in the first two to three years as they grow into a bigger business,” Pacheco said, highlighting the side benefits of the provision.

The DTI’s proposal would see newly registered e-commerce microenterprises exempted from all local and national taxes for the three-year period under very specific qualifications.

Under the plan, registered business entities must not be an affiliate, subsidiary or a franchise of any existing company.

Proprietorships, one-person corporations or partnerships must have no other registered companies, partnerships or businesses, whether previous or existing.

For corporations to qualify, each stockholder must have at least a 5-percent share in stocks and that the corporation has no nominal stockholders holding the shares in trust for others.

Aside from the three-year tax exemption, the DTI said they were also pushing for the establishment of an e-commerce bureau and an online business registry to provide consumers access to data and information so they could verify the validity and existence of virtual business entities.

The proposed legislation aims to cover transactions that are, in nature, business-to-business, business-to-consumer, as well as other online activities including online retail of consumer goods and services, online travel services, online media providers, online delivery services and digital financial services.

Consumer-to-consumer transactions are not included.

At least 15 different versions of the proposed bill have been filed this year, two at the Senate and 13 at the House of Representatives, all of which are still at the committee level.

—Alden Monzon INQ