Subsistence online entrepreneurs must register, pay taxes – BIR

The revenue regulation requiring online sellers to register and pay proper taxes will be applied to all persons involved in business, including the so-called “subsistence entrepreneurs.”

This was made clear by the Bureau of Internal Revenue (BIR) during a

House Committee on Ways and Means hearing on House Bill No. 6765 and 6944 proposing to establish digital taxation in the country.

During the hearing, BIR Commissioner Caesar Dulay and Deputy Commissioner Arnel Guballa briefed lawmakers on the issuance of Revenue Memorandum Circular (RMC) 60-2020, which they said, is a

reiteration of BIR RMC No. 55-2013 issued by former Commissioner Kim Henares. Both BIR directives mandate the obligation of online businessmen to register and pay the proper taxes.

“Personally, I’m after those who make big money, not the subsistence entrepreneurs and small enterprises,” said Albay Rep. Joey Sarte Salceda, chairman of the House Committee on Ways and Means.

But there are no exemptions cited in RMC 60-2020 as it will cover big or small entrepreneurs, including those who were forced by circumstances triggered by the COVID-19 pandemic to go into online selling.

Quezon City Rep. Bong Suntay suggested that BIR should focus its efforts on big businesses and spare the small ones, many of whom are only trying to recoup income losses due to unemployment and economic losses amid the pandemic.

But Dulay explained that the act of regulation cannot discriminate on the basis of size of the business. Nevertheless, Dulay stressed that smaller enterprises may enjoy certain benefits.

Assistant Secretary Dakila Napao of the Department of Finance also defended the memorandum, saying the intention is to capture first valueadded tax and later income tax. He pointed out that thresholds to taxation will be put in place.

On the other hand, Guballa said businesses should not be discouraged from registering for fear of being penalized.

Salceda had invited online entrepreneurs and others involved in digital transactions to submit their position papers on the two measures and the controversial RMC No. 60-2020.

He formed a Technical Working Group (TWG) that will further look into the RMC and lay the groundwork for a more thorough discussion on his proposed measures establishing the fiscal regime for the digital economy.