Internal revenue service running after Lazada, Netflix, not small-time online sellers

Photo: Lazada
Photo: Lazada

The Bureau of Internal Revenue (BIR) clarified in a virtual presser yesterday that it is not going after small-time online sellers, but corporations like e-commerce behemoth Lazada and streaming platform Netflix.

Deputy Commissioner Arnel Guballa said that on-line sellers who make just PHP250,000 (US$5,000) per year are exempted from paying taxes, but encouraged everyone to register with the BIR. His clarification comes after online sellers, estimated to be around 900,000, have complained of the BIR’s plan to tax their business, saying that the move was ill-timed and cruel. Countless Filipinos who have lost their jobs due to the COVID-19 pandemic had to resort to selling products and services online just to make ends meet.

“I just wish to inform everyone that the BIR actually wants to tax big companies such as Lazada, those foreign [firms] such as Netflix,” Guballa said.

Read: Malacañang backs plan to tax Pinoy online businesses despite criticisms

The tax official said that the law taxing online sellers was not new, and dates back to 2013, the term of President Benigno Aquino III. This was the same excuse given by Presidential Spokesman Harry Roque in a presscon earlier this week, where he said that while times were hard for Filipinos, they need to follow the law.

“Actually since 2013, there’s already a [directive] that says that everyone engaged in online selling needs to register with [the BIR]. We’re just implementing it now, during this time of pandemic and lockdown, due to the fact that there are now more people engaging in online selling,” Guballa explained.

Some entrepreneurs and even politicians have criticized the BIR for their move and urged the bureau to tax Philippine offshore gaming operators (POGOs) instead. These gambling companies, owned and operated by Chinese corporations, are notorious for dodging their taxes.

Guballa clarified that they are also going after such companies.

“We tax POGO workers with withholding taxes. Now with POGO, because they are offshore, the BIR is charging them with a franchise tax. Their lawyers say they are not taxable because they are located offshore, they are non-resident corporations, meaning they are foreign,” he explained.

“[But] the BIR continues to push, we say ‘Since you are doing business here in the Philippines, you should pay the franchise tax.’ Although when you read the law, it’s not clear whether or not offshore companies are liable to pay franchise taxes. So that’s where the legal issue comes in when it comes to these POGOs,” he added.

POGOs have sprouted all over the country since President Rodrigo Duterte, known for his cozy relationship with the Chinese government, came into power. Early this year, the BIR reported that at least 60 POGOs had failed to pay PHP50 billion in taxes in 2019.

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