Retailers group wants higher tax imposed on online sellers
MANILA -An association of local retailers is calling on the government to raise the planned tax rate for online sellers, saying the 1-percent withholding tax being considered is too low to achieve this move’s purpose of ensuring a level playing field.
Philippine Retailers Association (PRA) president Roberto S. Claudio told the Inquirer that owners of physical stores are subject to a 12-percent value added tax (VAT) while online sellers based overseas but cater to the local market are not.
“Online sellers have the advantage because they are not being subjected to the laws that we are being subjected to. The proposed withholding tax is just a shotgun solution by the government,” Claudio said in a phone interview.
Because of this, the PRA official said the planned tax rate should at least be benchmarked against the 12 percent VAT to level the playing field.
Further, he said the government should designate online marketplaces as the withholding agents of this tax given the different dynamic of online retailing.
Late last month, BIR Assistant Commissioner Jethro M. Sabariaga said they were already assessing inputs from stakeholders on the final draft of a new tax regulation covering online sellers.
Once released, it would amend the provisions of sections 2.57.2 and 2.57.3 of the 25 -year-old RR No. 2-98 to impose a creditable withholding tax on income payments made by electronic marketplace operators to online merchants.
These include marketplaces for online shopping, food delivery platforms, as well as online facilities for booking resorts, hotels, motels, inns, houses, condominium units, bed space, rooms for rent and other similar lodging accommodations.
The planned 1-percent withholding tax would be on top of existing withholding tax obligations being imposed to e-marketplace operators, including those already being collected from payments to transportation contractors for the delivery of goods and merchandise, and commissions on the goods and services actually sold.
Aside from the tax eyed for online sellers, Claudio said online sellers should also be subjected to the same stringent regulations on product standards, consumer welfare policies and intellectual property rights.
The PRA official said this is particularly true for online sellers based overseas, which he said continue to dodge local rules and regulations.