GOVERNMENT registration for online businesses is necessary to regulate the industry and protect consumers, and comes with benefits like incentives, subsidies, and tax breaks, a legislator said.
Valenzuela Rep. and House Trade and Industry Committee Chairman Weslie T. Gatchalian said in a statement Monday that the industry’s concerns that the government is readying a tax crackdown are offset by the benefits, which also include recognition as a registered business which allows them to more easily deal with banks.
“The DTI (Department of Trade and Industry) encourages registration of online businesses to ensure consumer protection and to build trust and confidence in the use of these online platforms. By legitimizing one’s business through registration, it becomes eligible to avail of loans, subsidies and tax breaks from the DTI and other government agencies,” he said.
Mr. Gatchalian was addressing the backlash to the Bureau of Internal Revenue’s (BIR) order for online sellers to register and pay tax.
The BIR issued Revenue Memorandum Circular (RMC) 60-2020 on June 1 ordering businesses earning income “through the use of any electronic platforms and media, and other digital means” to register and settle taxes on or before July 31.
The BIR warned that online merchants who fail to meet the deadline are subject to penalties. In 2013, the BIR issued RMC 55-2013 reminding taxpayers that online sales are taxable, but only the latest circular imposed a deadline to settle these taxes and warned that surcharges may apply.
Ways and Means Committee Chairman Jose Maria Clemente S. Salceda said he does not expect the registration of online merchants to yield incremental revenue for the government in the near term.
“For now, zero. And that’s absolutely okay. Because the economy benefits more by them being eligible for credit and other stimulus benefits like the wage subsidy,” he said in a statement Monday.
Mr. Salceda said that he supports the move to encourage online businesses to register, provided that they are able to benefit from the tax exemptions and benefits set forth in relevant laws including the Tax Reform for Acceleration and Inclusion Act (TRAIN) and the Barangay Micro Business Enterprise (BMBE) law.
Under TRAIN, those with annual taxable income below P250,000 are exempt from paying personal income tax.
Meanwhile, the BMBE law exempts all micro businesses from all taxes arising from their operations and from the minimum wage law. Micro businesses are those with total assets not exceeding P3 million.
Mr. Salceda also called on the BIR and DTI to automate filing and payment of taxes for online businesses.
“The DTI should also make Negosyo Centers accessible online. BMBE accreditation is still onsite. We can digitize this process. SEC application is already fully online, and there are more requirements in registering a corporation, so there is no reason we cannot digitize this process,” he said.
Mr. Salceda said that online businesses are “crucial” to the government’s stimulus and recovery plans in the face of the pandemic.
“They move faster than most bigger enterprises. They require very little capital to operate. They have been efficient uses of the tangible assets in Filipino households. They employ even stay-at-home mothers. And they encourage people to stay at home. I can’t think of a more efficient recipient and multiplier of our supply-side interventions,” he said. — Genshen L Espedido