BIR Deputy Commissioner Arnel Guballa clarified the agency was targeting to tax bigger online businesses and not small online sellers.
Guballa explained the Bureau of Internal Revenue (BIR) asked the over 900,000 online sellers to register to keep track of their number, as the taxman earlier clarified those who are earning less than P250,000 a year would benefit from tax exemption.
He cited the local subscription fees of US-based online streaming service Netflix as an example. The said fees include a value-added tax, which “the government wants to collect under the destination principle,” Guballa said at the Laging Handa briefing on Wednesday.
The BIR also wants to tax business owners who sell their items via shopping sites like Lazada, Guballa added.
“We are not really looking at those who were locked down and selling pansit online. We are looking at bigger businesses in online selling,” he said.
Netizens and lawmakers described the BIR memorandum order requiring online sellers to register and pay taxes as “ill-timed and insensitive.” Many Filipinos who lost their jobs during the lockdown turned to online selling to survive the COVID-19 crisis.
Also read: How to Register Online Business under BIR
Presidential Adviser for Entrepreneurship Jose Maria Concepcion meanwhile requested the government to postpone its plan of taxing online sellers until January next year.
The BIR however, said those who will not register their business activity and/or update their registration status on or before July 31, 2020, shall be imposed with a penalty for late registration.
BIR also warned that all those who will be found later doing business without complying with the registration/update requirement and those who failed to declare past due taxes/unpaid taxes should be imposed with the applicable penalties under the law, and existing revenue rules and regulations.
“We should allow these people to continue and then be stricter later on, maybe next year starting in January,” Concepcion said during the online conference “Flattening the Unemployment Curve.”
The government earlier insisted that requiring online businesses to pay register and pay taxes was never new, as the measure has been in places since the Aquino administration.
It is the timing to push strict compliance of the requirement during a crisis that has drawn criticisms from various sectors.