Albay Congressman Joey Salceda
By Rommel F. Lopez
Administration congressman Joey Salceda is seeking the exemption of online sellers from paying taxes after the Bureau of Internal Revenue (BIR) wants online merchants to register with them and pay taxes even while the country is still battling the coronavirus disease 2019 (COVID-19) pandemic.
On June 1, 2020, BIR Commissioner Caesar Dulay issued Memorandum Circular No. 60-2020, which sets a July 31 deadline for all online sellers to register and pay their taxes. Small online sellers and several lawmakers protested the move saying the BIR is further burdening people who are already burdened by the economic crisis triggered by the pandemic.
The BIR’s order covers online sellers and merchants and other digital platforms such as payment gateways, delivery channels, internet service providers and other facilitators.
Salceda yesterday said that the House ways and means committee which he chairs takes the position that the government “should go after the big money in big firms’ digital transactions, and not for BIR to go after the small entrepreneurs.”
“If your import is below P10,000, it should be exempt from duties. If your revenues are under P3 million, you shouldn’t have to register for VAT,” Salceda stressed.
“I especially want commitments from the BIR that the exemptions under the Customs Modernization and Tariff Act, Tax Reform for Acceleration and Inclusion law and the Barangay Micro Business Enterprise law be effected, so that we do not burden the small entrepreneur in these difficult times,” the Albay representative said.
He added that he will discuss the matter with the BIR through the congressional hearings his committee will conduct, more particularly during committee deliberations on his House Bill 6765 or the proposed digital economy taxation bill that aims to tax apps and social media networks, including the popular streaming service Netflix.
While he agrees that the government should continue to seek better ways of plugging leaks in the tax system, Salceda, an economist, believes that the government “has to do everything in a multi-stakeholder, multi-perspective way.”
Malacañang said it is in favor of the BIR’s order, but stressed that those earning below P250,000 yearly from their online sales should be exempted. Under the law, a sole proprietorship with annual earnings of P250,000 or less is not subject to tax.
Senate Economic Affairs Committee Imee Marcos said the BIR’s order to tax online sellers is a bad timing considering the pandemic.
“Let’s give time for the underground economy to flourish and help jumpstart the country’s economy. Else, they will continue to depend on government subsidy, two to three years maybe,” Marcos said.
Sen. Sonny Angara also questioned the timing of the BIR’s order “given the difficulties experienced by our countrymen.”
“But these are not new taxes but just collection of taxes due under existing laws. 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. It should’ve been done earlier,” Angara said.
Sen. Francis Pangilinan said “now is the time to give them relief” and “not the time nor place to place more burdens on our citizens.”
Sen. Joel Villanueva asked the BIR to prioritize the collection of back taxes from other sectors like POGOs, to raise much-needed revenue instead of going after online sellers.
“We know the government must collect taxes. Let’s focus on those that have been confirmed to have been delinquent in paying taxes,” Villanueva said adding that POGOs still owe the government P50 billion.
In a statement, the Department of Finance (DOF) clarified that the BIR is not going after online merchants for unreported sales or unpaid taxes” but that it is simply encouraging “online businesses to register with the BIR”.
“Online transactions have increased for quite some time now, especially during the community quarantine period. That’s why we want to take this opportunity to remind them to register their businesses. The BIR will issue an Operations Memorandum to this effect,” DOF Undersecretary Antonette Tionko said.