Philippines: Taxman wants his share from online businesses
The booming e-commerce industry in the Philippines has caught the eye of the country’s tax authorities who now seek to tap the sector for revenue as the coronavirus pandemic hit government income.
Filipinos went to the Internet in droves to sell goods from food to masks as the quarantine that started in March devastated jobs and hurt incomes.
As a result, the Philippine tax agency has ordered all online businesses to register, declare past transactions and pay correct taxes by end-July, according to a circular released on June 10.
“This Circular is issued to give due notice to 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 circular issued by the Bureau of Internal Revenue reads. It also covers payment gateways, delivery channels, Internet service providers and other facilitators.
Penalties for those who don’t comply
Entities who fail to perform these activities on time shall be meted with applicable penalties under the law and existing revenue rules and regulations, the tax agency said. It also advised newly-registered businesses to comply with the tax code’s provisions.
“With too few funds in government coffers, we won’t have aid and we won’t be able to extend help while the threat of Covid-19 remains,” presidential spokesman Harry Roque said in a virtual briefing on June 11.
The new tax regulation will not hit big e-commerce websites such as Lazada and Shopee as they are already tax compliant. But smaller sellers on their platforms would likely take the brunt of the levy.
Young consumers and small business sellers are driving the Philippines’ e-commerce market which is forecast to reach a volume $12 billion by 2025 from just $500 million in 2015, according to last year’s report by Google and Bain & Company. The projections were made before the pandemic struck, so a spike in online transactions during the outbreak was not factored in.
The booming e-commerce industry in the Philippines has caught the eye of the country’s tax authorities who now seek to tap the sector for revenue as the coronavirus pandemic hit government income. Filipinos went to the Internet in droves to sell goods from food to masks as the quarantine that started in March devastated jobs and hurt incomes. As a result, the Philippine tax agency has ordered all online businesses to register, declare past transactions and pay correct taxes by end-July, according to a circular released on June 10. "This Circular is issued to give due notice to all persons...
The booming e-commerce industry in the Philippines has caught the eye of the country’s tax authorities who now seek to tap the sector for revenue as the coronavirus pandemic hit government income.
Filipinos went to the Internet in droves to sell goods from food to masks as the quarantine that started in March devastated jobs and hurt incomes.
As a result, the Philippine tax agency has ordered all online businesses to register, declare past transactions and pay correct taxes by end-July, according to a circular released on June 10.
“This Circular is issued to give due notice to 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 circular issued by the Bureau of Internal Revenue reads. It also covers payment gateways, delivery channels, Internet service providers and other facilitators.
Penalties for those who don’t comply
Entities who fail to perform these activities on time shall be meted with applicable penalties under the law and existing revenue rules and regulations, the tax agency said. It also advised newly-registered businesses to comply with the tax code’s provisions.
“With too few funds in government coffers, we won’t have aid and we won’t be able to extend help while the threat of Covid-19 remains,” presidential spokesman Harry Roque said in a virtual briefing on June 11.
The new tax regulation will not hit big e-commerce websites such as Lazada and Shopee as they are already tax compliant. But smaller sellers on their platforms would likely take the brunt of the levy.
Young consumers and small business sellers are driving the Philippines’ e-commerce market which is forecast to reach a volume $12 billion by 2025 from just $500 million in 2015, according to last year’s report by Google and Bain & Company. The projections were made before the pandemic struck, so a spike in online transactions during the outbreak was not factored in.
