Senator Risa Hontiveros in a webinar last Wednesday urged the Bureau of Internal Revenue (BIR) to withdraw, review, and rewrite its guidelines in requiring online vendors to register and pay taxes.

Hontiveros pointed out that the exemption of small-time online sellers must be clarified and included in the memorandum released by BIR.

“Naging magulo para sa mga online sellers ang memo mula sa BIR. Mabuti pang bawiin, i-review, at i-rewrite muna ng ahensiya ang guidelines na nilabas nila,” Hontiveros said.

Hontiveros further suggested the BIR reissue its memo after Tax Deputy Commissioner Arnel Guballa during a public briefing clarified that only online sellers earning more than P250,000 a year would have to pay income tax.

The Revenue Memorandum Circular No. 60-2020 states that online entrepreneurs are given until July 31 to register their business activity or update their registration status to avoid penalties for late registration.

“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,” the memo read.

No tax payment, but registration needed

Clarifying that online sellers who earn less than P3 million a year will not pay Value-Added Tax, Guballa said that online sellers, regardless of income, would still have to register. Otherwise, they will pay penalties.

“Kung ikaw ay engaged sa online selling, kapag nahuli ka ng BIR later, magkakaroon ka ng penalties,” Guballa said.

Meanwhile, Finance Revenue Operations Group Undersecretary Antonette Tionko emphasized that the memo’s objective was “not to go after online merchants for unreported sales or unpaid taxes but to encourage those who are engaged in online businesses to register with the BIR.”

“Online transactions have increased for quite some time now, especially during the community quarantine period. That’s why we want to take this opportunity to remind them to register their businesses,” she said.

Experts on online selling taxation

While the issuance of the memo gained several reactions from the public, experts from the Ateneo community shared their views on the issue.

Geoffrey C. Butanas, CPA, a faculty member of the Accountancy Department said, “to be taxed is just right and it is just a duty as a citizen.”

“It [tax] is the life-blood of our government. It is our contribution to nation-building,” he said.

Butanas also pinpointed that paying taxes should be an equal obligation.

“Have we thought about the frontliners who are also working during the time of pandemic? They are also being taxed. So what is the difference for online sellers?”

Similarly, Mylene S. Caballero, CPA, DBA, also a faculty of the Accountancy Department, approves of collecting taxes from online sellers. For her, online sellers can earn more profit since they have lesser expenses in maintaining their online business.

“As good citizens, they have to contribute to the welfare of our country through paying tax,” Caballero said.

Ill-timed and insensitive

Taking into account the current state of the pandemic, Caballero stressed that the issuance of the memo is ‘ill-timed’. 

“The government should understand that some of these online transactions are just temporary. They should have issued that memo after the pandemic, since other businesses will continue to go on online transactions but others will not,” Caballero asserted.

She also speculated that BIR may have issued the memo since it “observed that many businesses in this time of pandemic have shifted into online transactions.”

Meanwhile, a student-entrepreneur who sells shirts online and who prefers to be called “Octane”, also expressed his disappointment at BIR’s timing in ordering online sellers to register and pay taxes.

“We’re in the middle of the pandemic and they’re demanding to register [in] less than two months? Very insensitive,” he said.

With the absence of online platforms and procedures, Octane underscored the possible difficulties in registration, as well as in categorizing and monitoring online sellers. 

He also stressed that being required to register is a ‘burden’.

“Even though small online sellers like me don’t have to pay taxes, being required to register is a burden. Additional costs, penalties, documentations, and all of that are a burden to us,” the student-entrepreneur expressed.

“It’s like they’re telling us to pay and register or else they will penalize us. It’s like paying a bribe so they won’t disturb us.”