Amid crisis, BIR to go after online entrepreneurs

BAD timing.

This was how entrepreneurs in Cebu described the move of the Bureau of Internal Revenue (BIR) to tax online sellers amid a pandemic-induced economic crisis.

Small-time online seller Joy (who requested anonymity) works on the side by selling perfumes and branded t-shirts.

She said the BIR’s directive is untimely since people are looking for sources of income to survive in the middle of the coronavirus pandemic-induced lockdown.

“Most Filipino workers were displaced and out of work, and they turned to online selling as their alternative source of living to support their family,” she said.

While she understands the function of the BIR to collect taxes, she urged the agency to specify in its guidelines whether it would also include small-time sellers or not.

“I do understand the intention of the BIR. I guess they want to regulate all businesses may it be physical or online, and they want to make sure people who are gaining so much through online platforms can’t avoid their responsibility of paying appropriate taxes, which in turn will be used by the government to support the nation, especially during this pandemic,” Joy said.

Since the varying stages of lockdown took place in March due to the Covid-19 pandemic, people isolated in their homes have turned to e-commerce to boost their income.

Declare transactions

On Wednesday, June 10, the BIR issued a memo requiring those into digital transactions such as online sellers to register and declare their past transactions subject to pertinent taxes on or before July 31. The memo covers “not only sellers/merchants, but also other stakeholders involved such as payment gateways, delivery channels, internet service providers and other facilitators.”

Malacañang on Thursday, however, clarified that online businesses earning less than P250,000 per year are exempted from paying taxes.

Another online seller, Jack (real name withheld), who manages online grocery services, assured that registering with the BIR doesn’t always mean that you need to pay taxes right away.

“There are rules and conditions on how you will be taxed.The tax system is based on the net income, so whatever you earn that’s the only thing taxable, and as a business person you do your own computations with your pricing,” he said.

Jack said there is nothing to worry about since the BIR registration is mandatory under the law.

The BIR’s memo also stressed that those who will be found later doing business without complying with the registration/update requirements, and those who fail to declare past due taxes/unpaid taxes shall suffer the applicable penalties under the law, and existing revenue rules and regulations.

‘We will go after them’

In a separate interview, BIR 13 Director Eduardo Pagulayan said whether the online business is big or small, they are still required to pay taxes.

“As long as you are engaged in business, you are required to register and comply with the usual reportorial requirements and pay the correct taxes,” he said.

Pagulayan said the amount of taxes to be paid will depend on the result of their business operations.

Online sellers have to comply with the reportorial requirements so the BIR could validate whether they are paying the correct taxes.

If the online seller will not comply, Pagulayan warned, “We have our means, and we will go after them.”