Gov’t mulls ban on online sale of cigarettes, liquor

By Beatrice M. Laforga, Reporter

THE government may ban online sales of cigarettes and alcoholic beverages if sellers are found to have sold these so-called “sin” products to minors.

“We will move to ban online sales of cigarettes & liquor,” Finance Secretary Carlos G. Dominguez III told reporters via Viber when asked about the possibility that sin products are sold online to people under 18.

Trade Secretary Ramon M. Lopez told BusinessWorld the government can prohibit the sale of cigarettes, liquor and electronic cigarettes (e-cigarettes) on online platforms, if sellers are not registered and do not check a customer’s age before completing a sale.

“We can ban (the) online (sale of) cigarettes, liquor, e-cigarettes and similar devices. Especially if sellers are not registered and they don’t get profile of buyers and if they don’t assure if buyer is no longer minor,” Mr. Lopez said in a phone message on Sunday.

He said they still need to establish a system where online sellers can register with the Department of Trade and Industry (DTI) and the Bureau of Internal Revenue (BIR) to ensure they comply with product standards and conduct customer checks.

“These can be done by direct company online sales and major platforms that should be registered,” he said, noting companies can get the profiles of buyers to verify if they are minors.

For unregistered sellers, “they must be banned,” Mr. Lopez said.

Sale of tobacco products and alcoholic drinks to minors are prohibited.

The DTI is seeking to amend Republic Act No. 7394 or the Consumer Act of the Philippines to include rules for the e-commerce industry.

Alcoholic drink products are being sold on e-commerce platforms such as Lazada and Shopee. A pop-up message appears before customers can view and buy the products sold by verified sellers, asking them if they are over or under 18 years old for Lazada and 21 years old for Shopee.

However for cigarettes, a simple search on these online platforms showed packages of different brands of cigarettes were being sold by various, unverified sellers. However, there are no pop-up messages asking for the customer’s age.

Collections from excise taxes on “sin” products have slumped due to the lockdown and liquor bans imposed by local governments.

Preliminary data from the Finance department showed excise tax collections from alcohol and tobacco products dropped 43% to P11.9 billion in May, albeit at a slower pace compared with the sharp 99% decline seen in April. This brought year-to-date collections to P63 billion, still down 39% from a year ago.

The Department of Finance (DoF) is looking closely at the e-commerce industry, which has seen sudden growth during the lockdown.

In June, the BIR, an attached agency of DoF, issued Revenue Memorandum Circular (RMC) No. 60-2020 giving online sellers until July 31 to register their business with the bureau or update their registration.

“As part of the government’s efforts to implement a tax collection program on digital transactions, the BIR issued RMC No. 60-2020 to remind everyone in the Philippines who are engaged in online selling of goods and services to register with the BIR,” Mr. Dominguez said in a June statement.

For value-added tax (VAT) purposes, businesses that have gross receipts of less than P3 million are exempted from VAT.

The Tax Reform for Acceleration and Inclusion Act also exempts taxpayers earning P250,000 a year from income tax.

“Registering with the BIR not only helps the government generate additional revenue for its various projects. Joining the formal economy also ensures that these businesses and their employees are eligible for government assistance programs,” Mr. Dominguez has said.

DoF and BIR are studying how to tax the digital economy. The DoF estimated the government could raise an incremental revenue of P14-17 billion from the 12% VAT charged on online transactions.