Palace backs BIR plan to slap online sales with VAT

MANILA, Philippines - Malacañang supports the plan of the Bureau of Internal Revenue (BIR) to collect value added tax (VAT) on online sales despite objections by those who would be affected by the regulation.

BIR Commissioner Kim Jacinto-Henares said majority of online traders were not issuing sales invoices for transactions, which in turn denies the BIR from collecting more revenue from taxable transactions.
Under the rules, online sellers shall be registered as such with the BIR and their electronic invoicing shall likewise be registered, either directly to the BIR or a third-party accredited by the agency.
Online traders are just the latest sectoral group that the BIR has singled out as it attempts to reach collection goals.

The BIR had earlier announced that the bureau would be stricter with self-employed individuals who were not fully declaring their incomes when paying taxes.

Asked about the issue, deputy presidential spokesperson Abigail Valte said online stores were no different from businesses with physical stores.
“What Commissioner Henares is after is for them to pay the proper income tax and VAT because these involve sales and VAT must be imposed depending on the items being sold.

If it’s retail, that really is subject to VAT,” Valte said.
Valte clarified that the BIR is targeting “online sites that really do selling as a business” and not those on social networking sites like Facebook who were only selling secondhand items.
“That’s not the intention of the BIR.

She (Henares) mentioned big online sites that people really go to to buy things. I won’t mention them anymore but everybody has a good idea what these sites are,” Valte said.
“It’s a matter of implementing the law. And the national internal revenue code states that if you are a seller and that you engage in retail, then you are subject to tax unless you can show the BIR that you are exempted under a particular law,” she said.

Valte said there was no need for another law to be passed because “the interpretation of the BIR is that they are no different from merchants who sell their wares in physical stores.”