DOF allays fears of online micro entrepreneurs

Registering their businesses with the Bureau of Internal Revenue (BIR) will not necessarily mean additional tax burden for online sellers, Finance Secretary Carlos Dominguez III said yesterday, amid the backlash from various groups shocked by the tax agency’s directive issued while many parts of the country are still under quarantine.

“What we are asking right now is just for online sellers to register with the BIR. Whether or not they will be subject to tax depends on their specific

circumstances,” Dominguez said in a text message to reporters.

Citing the Tax Reform for Acceleration and Inclusion (TRAIN) Act, Dominguez said online sellers – recognized as self-employed individuals – would be exempted from paying income tax if they earn P250,000 and below annually.

“Self-employed individuals are subject to the graduated rates in the Tax Code. For instance, a seller earning less than P250,000 will be subject to zero income tax. The rates for individuals have really gone down since TRAIN,” Dominguez said.

Furthermore, he said sellers with gross receipts not exceeding P3 million are exempted from value-added tax (VAT).

For online merchants with earnings above these thresholds and who have not settled their tax liabilities, Dominguez said they may be eligible for the proposed general tax amnesty program, which is still pending in Congress.

“If they have any tax liabilities that are unpaid for prior periods, then they certainly can be covered by a general tax amnesty. That is why we are still waiting for Congress to pass the legislation on tax amnesty,” he said.

The BIR earlier issued Revenue Memorandum Circular 60-2020, which notified those who do business through digital platforms to register with the tax agency on or before July 31.

It also encouraged online businesses to declare and pay the corresponding taxes on past transactions, without penalty, if the declaration and payment are made on or before the said date.

The agency warned that all individuals or corporations found later on to be doing business without complying with these requirements would be meted with applicable penalties under the law.

Finance Undersecretary Antonette Tionko stressed earlier that the goal of the circular is not to chase after online sellers, but simply to remind them to register their businesses with the BIR.