Lopez: Barter taxable only if treated as business

MANILA, Philippines — Trade Secretary Ramon Lopez clarified Thursday, July 16, 2020, that barter trading is only taxable if such acts are being treated as a business.

Lopez made the remark after receiving flak over his pronouncement that barter is not allowed, saying that the Department of Trade and Industry (DTI) will go after those involved in online barter.

In an interview with radio station DZMM, Lopez clarified that when he was initially asked about the topic, he thought the issue was about cross-border trade which is covered by regulations under an executive order.

“Subalit I think ang nire-refer pala nilang tanong ay local partner—ibig sabihin ay dito lamang sa Pilipinas at ngayon nga may mga bagong development sa social media, yung mga barter exchange,” Lopez said.

(I think what the question was referring to was local partners—meaning those that happen locally and now there is a new development on social media which is barter exchange.)

“At kung itong local naman ang pinag-uusapan, wala namang pumipigil na batas dyan subalit they will be subject to registration, may regulation po yan, subject to registration tsaka subject to tax kung ito talaga ay negosyo na,” the trade secretary explained.

(If we are talking about this, there are no laws that are stopping them but they will be subject to registration and regulation. They are subject to tax if they are already treated as businesses.)

Lopez said that those that operate under the “regular course of trade and business” need to register and settle their taxes. However, if a business earns P3 million and below annually, they are exempted from value-added tax.

Further, Lopez said that bartering that happens irregularly or between friends and relatives are not considered as businesses and are not taxable.

“Kapag ito (barter) ay negosyo na talaga at above P3 million, talaga ho kailangan ng tax. Kaya yun ang initial reaction natin, sabi ko naman, kung hindi ito nata-tax at ito ay negosyo na, yun ang ilegal,” Lopez said.

(If barter is already treated as a business and earns above P3 million, it really needs to be taxed. That’s why my initial reaction was if it is not taxed and it is already a business, it is illegal.)

“Pero kung personal exchange ito, magkakapitbahay o magkakaibigan, below the radar screen naman yan, hindi naman yan kasama sa pinag-uusapan nating business that has to be taxed,” the trade secretary added.

(But if these are just personal exchanges between neighbors and friends, these are below the radar screen already and these are not included in the businesses that need to be taxed.)

Asked how the DTI is monitoring barters, Lopez said authorities are monitoring those that are in “regular transaction.”

“Ibig sabihin, everyday, yan ang ginagawa and of course it will show na yun na ang negosyo nila. Subalit kung ito ay mga iba-ibang tao na paminsan-minsan lamang nagt-trade, obviously ito ay personal naman,” Lopez said.

(This means that if a person is doing it everyday and of course, it will show that it’s a business already. But if trade happens between different people and they trade irregularly, obviously these are just personal transactions.)

“Pero kung ito ay galing sa isang kumpanya na or isang tao na everyday, yan ang ginagawa niya, negosyo na, then yan ang kailangan mag-rehistro,” he added.

(But if these happen from companies and individuals who engage with it on a daily basis, then that’s business and they need to register.)