With consumer protection in mind, the Department of Trade and Industry (DTI) urged online businesses to register with the government. This comes in light of the recent directive of the Bureau of Internal Revenue (BIR) for online sellers to register their businesses on or before July 31, 2020.
In BIR Circular No. 60-2020 released on June 10, the agency notified all persons doing business and earning income in any manner or form, specifically those engaged in an online business, through any use of electronic platforms and media or any digital means, to follow the Tax Code.
“There is greater traceability if online sellers are registered and this increases the trust factor and confidence of the online buyers in making the transaction online. This addresses the element of trust which is crucial if we are to grow the e-commerce in the country,” DTI Secretary Ramon Lopez said.
Secretary Lopez added that “In recent past, issues and complaints on online transactions were the headlines. I believe that the registration of online businesses is for the good of the e-commerce industry if we want this sector to grow.”
Further, Secretary Lopez explained that even in the brick-and-mortar business model, the Department has always been encouraging businesses to register. DTI estimates that there are more than 6 million micro entrepreneurs that are not registered—also known as those in the informal sector. Only about 1.5 million micro entrepreneurs registered.
“We know, however, that eventually, the unregistered business will register as they grow in size, because sooner or later, they will have to borrow from formal lending institutions like banks and their audited financial statements will be required. Moreover, if they get to serve larger establishments, official receipts for their sales will be required, thus they will have to be registered,” Sec. Lopez said.
“This reality is true, for both in the brick and mortar and in the online business. At any rate, the rule basically applies to those really in business, regularly selling. Even if such activity is small in size, it must be registered. Anyway, annual income below Php250,000 is exempted from income tax.”
The trade chief emphasized, however, that those selling intermittently, on an irregular basis or selling homemade stuff as a hobby during this period of the pandemic, are understood as not yet in business. Thus, these are not required to register.
He reiterated, “Business registration has always been the right way of doing business. It is needed in growing a business. It can also increase buyer’s confidence.”
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