BIR sets 2024-2026 target for online-transaction tax system

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The Bureau of Internal Revenue (BIR) said it hopes to establish a dedicated platform for taxing online transactions by 2026 at the latest as part of its 10-year digitalization road map.

The plans are contained in Revenue Memorandum Order No. 27-2020, which also contains a broader plan to expedite many taxation processes and improve the taxpayer experience.
Forming the second phase of the two-part road map, the BIR said hopes to set up the platform for the taxation of digital transactions sometime between 2024 and 2026.

By 2027-2030, the bureau aims to establish a “data-driven collection, audit and enforcement” system, as well as to offer “customized TP (transfer pricing) services.”

“The BIR is tasked to consistently achieve increasing revenue targets to meet equally increasing demands. Hence, BIR needs to improve further its existing capabilities, policies, processes, and systems through digital transformation,” according to the MO, a copy of which was posted Thursday.

The bureau said the road map follows Finance Secretary Carlos G. Dominguez III order to “completely modernize tax administration” and streamline services.

The Department of Finance and the BIR are currently studying how the bureau can capture the 12% value-added tax (VAT) from digital transactions.

Government estimates show VAT collected from the sales conducted online could raise up to P17 billion in fresh revenue.

So far, 3,254 online sellers have registered with the BIR since the bureau issued a circular in June that made registration mandatory. Around 3,148 were individual vendors while 106 were corporations.

BIR Deputy Commissioner for Operations Arnel SD. Guballa said prior to June, the bureau’s data on online sellers was disorganized since there was no designated database for the growing segment.

“Now, the BIR will assign a specific industry code for monitoring compliance in filing and payment,” Mr. Guballa said last month.

Online vendors have until the end of August to register or update their registration without penalties.

The first phase of the digital road map timeline runs from 2020 to 2023, representing initial moves to build a digital culture within the bureau en route to streamlining its services.

This phase hopes to improve the taxpayer experience at the regional office level and through the use of digital registration, filing and payment methods, penciled in for 2020-2021. — Beatrice M. Laforga