17 March 2014

Bloggers Shall Pay Tax Doing Online Business Transactions

How can we forget Kim Henares? If you don't know her, KIM S. JACINTO-HENARES is the Commissioner of Bureau Internal Revenue(BIR), a calm and sharp, that had been favorited topic on social media and news nowadays. Of course, this brave woman known-to-be the Tax Woman Cometh whose mission is to capture those tax evaders and collect P1.066 trillion within this year 2014. 

Also, she makes sure we all pay correct taxes like VAT, EWHT, and other taxes. (and we make sure also it will be on distributed fairly and just to Filipino people not on pockets of those corrupt officials).
According to Philippine Law, we SHALL pay taxes. Although it is pain on our side to pay those taxes but must oblige to pay.

With that, Bloggers or Online workers(skeptical) or any online business transactions tend to be included with the implementation of tax collection. I feel that BIR is very serious, in fact, their social media officer emailed me something like this:

Mr. Richard Maboloc

Good day 'Sir.

We would like you to please review the attached file while we verify your online earnings as BIR now collects withholding tax from independent online publishers.
If you have legible documents that you would like to send, you may reply to this email. Nonetheless, you may not need to do anything as of the moment.
You will be contacted by our IT officer for verification as soon as possible. 
Thank you.

The attached file is the REVENUE MEMORANDUM CIRCULAR NO. 55-2013 dated August 5, 2013 originally signed by the Commissioner of BIR.

Subject: Reiterating Taxpayers’ Obligations in Relation to Online Business Transactions

At first I was reluctant to reply, the next few hours, I replied and asked what were those requirements to finally comply, declare, and pay tax that falls on the categorized online business transaction. Still, There is no reply yet.

For the meantime, I read the contents of the said circular. I will be giving main points here.

Kinds of online business
  • i. Business to Consumer (“B2C”): which involves online stores selling goods and services to final consumers;
  • ii. Consumer to Consumer (“C2C”); and
  • iii. Business to Business (“B2B”): which encompasses job recruitment, online advertising, credit, sales, market research, technical support, procurement and different types of training. 
Common Types of online business transactions in the Philippines

1. Online shopping or online retailing
– This is a form of electronic commerce whereby consumers directly buy goods or services from a seller over the internet without an intermediary service. An online shop, e-shop, e-store, internet shop, web shop, web store, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar-retailer or shopping center.

2. Online intermediary service - An intermediary is a third party that offers intermediation services between two trading parties. The intermediary acts as a conduit for goods or services offered by a supplier to a consumer, and receives commission therefore. In this case, the relationship between the intermediary and the merchant shall be that of a principal-agent relationship which shall be governed by their agreement including but not limited to the amount of commission, manner of transmitting the same, etc.

However, in the following instances the intermediary service provider shall be considered the merchandiser/retailer itself:

  • a. when consumers buy goods or services from an intermediary service provider who controls such collection of buyers’ payments, and thereafter receives commission from the merchant/retailer
  • b. when the intermediary markets multiple products for its own account (considered retailer or merchandiser as to the said products).
3. Online advertisement/classified ads - Online advertising is a form of promotion that uses the internet to deliver marketing messages to attract customers.

4. Online auction – These are auctions conducted through the internet via an online service provider that specifically hosts such auctions. Through this service, the seller sells the product or service to the person who bids the highest price.

As a  blogger or publisher, I guess I fall on the Intermediary service or Online advertisement(since I put advertisement on my blog). But still I am a third-party entity here.

Does BIR have the range for those qualify taxpayer? Or should I say those who earn are automatically included in the list.

Policies and Guidelines
Like any other business establishments, persons who conduct business through the above-described online transactions and its permutations have the obligations to:

  • Register the business at the Revenue District Office (RDO) having jurisdiction over the principal place of business/head office (or residence in case of individuals), by accomplishing BIR Form 1901 (for individuals) or 1903 (for corporations or partnerships), and pay the registration fee to any Authorized Agent Bank (AAB) located within the RDO. A BIR Certificate of Registration shall be issued by the RDO, reflecting therein the tax types required of the concerned taxpayer for filing and payment, which shall be displayed conspicuously in the business establishment;
  •  Secure the required Authority to Print (ATP) invoices/receipts and register books of accounts for use in business, which may either be:
a) Manual books of accounts, booklets of invoices/receipts, accounting records or loose-leaf of such;
b) Computerized Accounting System (CAS) and/or its components including e-Invoicing System under Revenue Memorandum Order (RMO) No. 21-2000 as amended by RMO No. 29-02.
  • Issue registered invoice or receipt, either manually or electronically, for every sale, barter, exchange, or lease of goods and properties, as well as for every sale, barter, or exchange of service. Said invoice or receipt shall conform to the information requirements prescribed under existing revenue issuances, and shall be prepared at least in duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as part of the latter’s accounting records
  • Withhold required creditable/expanded withholding tax, final tax, tax on compensation of employees, and other withholding taxes. Remit the same to the Bureau at the time or times required, and issue to the concerned payees the necessary Certificate of Tax Withheld.
  • File applicable tax returns on or before the due dates, pay correct internal revenue taxes, and submit information returns and other tax compliance reports such as the Summary List of Sales/Purchases (SLS/P), Annual Alpha List of Payees, etc., at the time or times required by existing rules and regulations; and
  •  Keep books of accounts and other business/accounting records within the time prescribed by law, and such shall be made available anytime for inspection and verification by duly authorized Revenue Officer/s for the purpose of ascertaining compliance with tax rules and regulations.
The existing tax laws and revenue issuances on the tax treatment of purchases (local or imported) and sale (local or international) of goods (tangible or intangible) or services shall be equally applied with no distinction on whether or not the marketing channel is the internet/digital media or the typical and customary physical medium.

Any person engaged in internet commerce who fails to comply with applicable tax laws, rules and regulations shall be subject to the imposition of penalties provided for under the existing laws, rules, and regulations, in addition to the imposition of penalties pursuant to the applicable Section/s under Chapters II and IV, Title X of the National Internal Revenue Code of 1997, as amended.

You can get FULL circular: REVENUE MEMORANDUM CIRCULAR NO. 55-2013

Final Thoughts
Some of my friends said that in order to pay with these taxes, it should be individually declared. Still, waiting for the verification. -_-

What's your idea about this?


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