Small online sellers shouldn't worry about missing Sept.1 deadline: Tax expert

Bruce Rodriguez, ABS-CBN News

Posted at Aug 31 2020 07:22 PM

Jonathan Cellona, ABS-CBN News file photo

MANILA - Small online sellers need not worry about missing the Sept. 1 deadline to register set by the Bureau of Internal Revenue, a tax expert said on Monday.

Mon Abrea, founding chairman of tax services and consultancy firm, Asian Consulting Group (ACG) said small online sellers whose incomes don’t exceed P250,000 per year can expect some leniency from the BIR.

"Para doon sa maliliit at ginamit lang ang online selling bilang pantawid gutom o para lang sa kanilang mga pangangailangan, hindi kayo dapat matakot," Abrea said.

(For those who are using online selling just to make ends meet or for their needs, you don't have to be scared.")

"Kahit na malaman pa ni BIR yan, kung malaman nila na kung gaano ka-sobrang liit niyan, hindi yan sapat para gawan ng imbestigasyon ng BIR," he further explained. "Kasi nga sabi naman ng TRAIN Law kung hindi naman lumagpas sa P250,000 exempted naman talaga 'yan sa income tax, malinaw sa batas 'yun."

("Even if the BIR knows that, once they discover that the transactions involved are small, it's not enough for the agency to mount an investigation. Because under the TRAIN Law, if the annual net income doesn't exceed P250,000, it's really exempted from income tax, that's clear according to the law.")

Abrea said that while the law states that all businesses should be registered with the government, small online sellers can expect leniency, especially during the ongoing pandemic.

"Kasi ako naniniwala, siguro naman ang gobyerno merong hustisya para hindi panagutin 'yung mga maliliit na negosyo," he explained.

("Because I believe that government has a sense of justice to not penalize the small businesses.")

But it's a different story for those already earning millions of pesos through online means like big retailers with digital channels and social media influencers. They should comply with the BIR rules or risk being slapped with tax evasion charges including a 25 percent surcharge and 12 percent interest on all tax liabilities assessed by the agency, Abrea said.

But Abrea also said that the BIR needs to digitalize its processes if it wants better compliance from online sellers and other players.

He said, digitalizing the tax collection agency could capacitate it to actually deal with the big online players like Facebook, Netflix, or Alibaba.

"Considering these are online transactions, it requires online interventions or administration," Abrea said.

"And hopefully we will see that in the budget because as far as I'm concerned, I don't think BIR was given a huge budget for their transformation."

Abrea added, the Digital Tax Bill is also still pending in Congress and should also be carefully studied "so that we will not be exposed to international conflicts or problems with other countries when it comes to enforcement."

As of the latest data, there are only over 3,500 online sellers that have registered at the BIR.

Based on estimates of the Department of Trade and Industry (DTI) there are at least 1 million entrepreneurs conducting business online.

Ninety seven percent of those who registered are sole proprietors which Abrea said, could be exempt from paying value-added taxes (VAT) and even income tax, if their income is below P3 million and P250,000 respectively.

Meanwhile, 3 percent of those who registered are corporations, which government could be expecting to collect a bulk of online-related taxes from.

Earlier, the Department of Finance (DOF) said, they expect to collect P17 billion in VAT from online businesses, which can help government fund its COVID-19 response and recovery programs.