Several senators are questioning the move by the Bureau of Internal Revenue (BIR) to press owners of online shops to register their businesses during an economic crisis, saying this would burden and not help small entrepreneurs who are trying to cope with an economy crippled by the COVID-19 pandemic.
Revenue Memorandum Circular No. 60-2020 issued by the BIR on June 1 gave these businesses until July 31 to register and pay the required taxes.
The BIR’s latest directive spurred complaints from netizens and online sellers, who said they were only trying to find ways to make a living and feed their families despite the lockdown.
Deputy Revenue Commissioner Arnel Guballa on Thursday told the Inquirer that the BIR was targeting “all online sellers to register.”
BIR Commissioner Caesar Dulay said these included “not only partner sellers/merchants, but also other stakeholders involved such as the payment gateways, delivery channels, internet service providers and other facilitators.”
Go after Pogos
Instead of cracking the whip on these small businessmen, Sen. Joel Villanueva on Thursday said the government should go after big-time tax evaders like the owners of Philippine offshore gaming operators (Pogos).
“We know the government needs to collect taxes. It must first go after those with proven tax liabilities. Up to now, Pogos have yet to pay the P50 billion they owe. They should be the focus of the BIR,” he said in a statement.
Villanueva noted that the government had given Pogos many opportunities to settle their tax obligations.
It even allowed them to operate during the quarantine provided that they settled their unpaid taxes first, he said.
Villanueva said the BIR should also be accommodating to Filipino entrepreneurs.
“Let us be grateful that our fellow countrymen are resourceful. We haven’t even given aid to many, and yet we plan to tax those who want to earn a living decently,” he said.
Ill-timed move
Sen. Risa Hontiveros also said the BIR should focus first on the Pogos’ unpaid taxes instead of going after Filipinos who earn little from online selling.
“Why are we lax on Pogos but cruel to Filipinos?” Hontiveros said, pointing out that online gambling operators were allowed to operate during the quarantine period even if they were considered nonessential businesses.
“Can we put Filipinos’ welfare first?” she said.
Sen. Imee Marcos also believes the BIR move was ill-timed.
“Let’s give time for the underground economy to flourish and help jump-start this country’s economy. Else, they will continue to depend on government subsidy. Two or three years, maybe,” Marcos said.
Later on, she said, the BIR could ensure that e-businesses pay the proper taxes by only allowing compliant businesses to sell in the online marketplace.
“They will have to show a third party-vetted compliance trust mark. That’s how other countries do it,” she said.
Relief, not burden
Sen. Francis Pangilinan said this was not the time to tax and place more burden on the people.
“Now is the time to give them relief and support,” he said in a text message.
Sen. Sonny Angara said that while the timing of the BIR order was not the best given the difficulties many people were facing, the taxes that the bureau wanted to collect were nothing new.
The BIR is just seeking to collect taxes that are supposed to be paid under existing laws, Angara noted.
“So if you ask a seller who has a store, he will say it’s only fair to have a level playing field since that seller pays the transaction taxes due,” he said in a text message.
The BIR should have issued the reminder earlier, he said.
Malacañang appealed for the public’s understanding regarding the government’s tax collection effort.
Funding pandemic response
“We are getting our funding for the COVID-19 response from the BIR and the Bureau of Customs. So while our funding requirements go up, we will continue to look for ways to increase our intake of taxes,” said presidential spokesperson Harry Roque.
He said that “if our country’s coffers are empty, we have no way of distributing aid while COVID-19 remains a threat.”
Left jobless by the lockdown imposed in March, many Filipinos resorted to e-commerce platforms and social media such as Facebook to sell food products and nonfood items.
The restrictions due to the COVID-19 pandemic paved the way for a boom in e-commerce, since people were restricted to their homes and became reliant on delivery services.
Quoting Socioeconomic Planning Secretary Karl Kendrick Chua, Roque noted that tax laws exempted online sellers who make less than P250,000 a year.
“If your online business net income does not exceed P250,000, you won’t have to pay anything. You only need to register your business,” Roque said.
Difficult to collect
While these rules were already put in place seven years ago, BIR officials had admitted that it was difficult to collect online stores’ tax payments since there were no physical marketplaces that revenue officers could audit.
Guballa said the BIR did not have data on these shops’ level of tax compliance.
Estimates on how much more the country’s biggest tax-collection agency could collect from them would be determined once all online stores formalized their operations.
Dulay said the BIR would not slap penalties on updated or late registrations, as long as these were done on or before July 31.
“Likewise, they are encouraged to voluntarily declare their past transactions subject to pertinent taxes and pay the taxes due thereon, without corresponding penalty, when declared and paid on or before the said date,” he said.