Why the BIR is going after online sellers

Posted at 12/27/12 5:22 PM

MANILA, Philippines - The Bureau of Internal Revenue (BIR) on Thursday defended its move to go after online sellers.

BIR chief Kim Jacinto-Henares said tax administrators around the world have always faced the problem of bringing the informal sector into the tax net and making sure they pay the correct taxes. The online selling community, she noted, is part of the P300-billion informal sector.

"First, the online business is part of the informal sector. We also have to deal with them. Secondly if we don't deal with them, then basically we are not leveling the playing field with someone who has a physical store. So people will just shift to the virtual store to the detriment of people who have the physical stores and hire people," Henares said on ANC's News Now.

The BIR has said it will go after online businesses who do not pay taxes, as a way to boost tax collection.

Henares said the BIR will only focus on online businesses that actively trade, sell and produce goods and services. Individuals who buy and sell second-hand goods online are not covered.

"We're talking about people who engage in business - people who trade, buy and sell, or who produce and sell (online)... They're just like any other business except that it is not a physical store but a virtual store," she said.

Like actual stores, Henares said online stores should give receipts, either electronically or manually, to their customers.

"We're going after the doctors for not issuing receipts, so what's the difference with an online store? They are engaged in business, so they should also issue receipts. We're applying the law across anyone, whoever they may be," she added.

The BIR is hoping to go after the rest of the informal sector and make sure they pay the correct taxes to the government.

But before the BIR goes after the sari-sari store owners, Henares said they should start first with "people who are educated and know their tax laws."