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The BIR Is Going After Online Sellers. Should You Be Worried?

Do you still need to register if you earn so little?
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On June 10, the Bureau of Internal Revenue (BIR) published a memorandum ordering all online sellers to register their businesses for taxation purposes not later than July 31.

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The BIR’s Memorandum Circular No. 60-2020, dated June 1, notifies “all persons doing business and earning income in any manner or form, specifically those who are into digital transactions through the use of any electronic platforms and media, and other digital means, to ensure that their businesses are registered pursuant to the provisions of Section 236 of the Tax Code, as amended, and that they are tax compliant.”

The order covers online sellers, partner sellers or merchants, payment gateways, delivery channels, and internet service providers. Businesses must also issue receipts, keep books of accounts and other accounting records, file tax returns, and pay correct taxes on time.

Lawmakers criticized the BIR’s registration drive.

Party-list Representative Niña Taduran criticized the BIR’s registration drive, calling it insensitive. In a statement, Taduran called the move untimely, considering the pandemic.

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“These online sellers just want to put food on the table. This might even be just a temporary activity for them until they find a more stable job,” said Taduran.

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Senator Risa Hontiveros also issued a statement on June 11.

Imbes na online sellers, baka puwedeng singilin muna ang mga POGO na may [P50 billion] in unpaid taxes? Hindi ’yung dagdag-perwisyo pa sa sarili nating mga kababayan na kaunti na nga lang ang kita para pandagadag-gastos sa pamilya nila,” said Hontiveros.

ALSO READ: How to Get a Business Permit

(Instead of going after online sellers, perhaps [the BIR] should go after POGOs which owe [P50 billion] in unpaid taxes? They shouldn’t inconvenience our countrymen who have little income to support their families.”)

Should you be worried?

If you are selling food, gadgets, or any kind of service online, you are covered by the BIR’s order, even if you are only doing it part-time or as a sideline.

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ALSO READ: BIR Registration for the Self-Employed

But there’s a silver lining. Online sellers earning below P250,000 yearly are tax exempt, according to Malacañang.

“If your online business net income does not exceed P250,000 eh wala po talaga kayo ibabayad (you don't have to pay),” said presidential spokesperson Harry Roque.

But even if you earn less than P250,000 a year, you still need to register with the BIR, which will make random inspections of online sellers after July 31. Those found without proper permits or unregistered sellers will face penalties.

ALSO READ: How To Register Your Startup’s Business Name With DTI

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Mario Alvaro Limos
Features Editor, Esquire Philippines
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