Are you an online seller? Are you selling products or provide services via the Internet? If you answered yes to both questions, then you are the subject of the Bureau of Internal Revenue’s Revenue Memorandum Circular Number 55-2103.
Taxes for Online Businesses
When It All Began
The sale of goods and services through online channels has grown rapidly in recent years. A lot of people have discovered the ease and convenience of buying in the comfort of their own home, office, or even Internet cafes. From big to small-sized enterprises, business owners realized the advantage of being online and now almost every kind of business sell their products or services in the world wide web.
Even those who do not have physical stores are encouraged to sell online upon realizing this trend. Online retailing has become unstoppable may it be through virtual shopping malls, web stores, online marketplaces, and most recently through social media like Instagram and Facebook. The rising trend of online businesses did not go unnoticed by the BIR in the tax bureau’s attempt to increase collections year after year. The BIR stands by the law that states all Filipinos earning income within the country are subject to pay corresponding taxes. The bureau adds that online business offering goods and services are no different from merchants with physical stores or offices, thus must be subjected to paying taxes.
Who Are Covered by This Guideline?
There are two types of business owners covered by the BIR’s RMC 55-2013:
1. Online retailers or online shop owners. Anyone who sells products and services online may it be through an e-commerce shop or virtual shop belongs to the category under online retailers. As long as the online store is analogous to a physical store where there is retail of products or services, the online shop must pay corresponding taxes for goods and services sold.
2. Online intermediary services providers. An intermediary liaises between two trading parties and receives the commission for doing the job.
If you fall under one or both categories of an online business, you need to pay your taxes the same way a regular store owner pays his tax obligations for revenues generated by the sale of goods and services. Your obligations as a taxpayer include (in order):
1. Secure a Barangay Clearance.
2. Secure a Mayor’s Permit.
3. Register at the Revenue District Office (RDO) that has jurisdiction over the principal place of business or the head office, or in the case of individuals, the residential address. Accomplish the necessary forms and pay the registration fee at accredited banks within the RDO. The BIR through the RDO will then issue a Certificate of Registration (COR), which should be displayed at all times.
4. Secure the Authority to Print (ATP) invoices and register books of accounts, either manual books or computerized accounting system.
5. Issue manual or electronic receipts, whichever is applicable, for every sale, trade or barter or goods and services. The receipts should conform to the rules prescribed by the bureau and must be issued in duplicate at least, the original of which should be given to the buyer. The duplicate is retained for accounting purposes. A receipt or invoice is required to be issued for products or services amounting to PHP25.00 or more.
6. Withhold required creditable or expanded withholding taxes and remit the same to the BIR at the prescribed schedule.
7. File applicable tax returns on or before the due dates and pay the corresponding taxes.
8. Keep books of accounts updated. Books must be readily available for inspection and verification whenever the RDO deem it necessary to check for compliance.
Online selling is a game changer. It is proven to be more convenient for both seller and buyer than doing business at a physical store or office. It is also income generating thus subject to taxes too. It is the online business owner’s duty to issue receipts and file returns.