BIR Requires Online Sellers, Freelancers to Pay Tax, Register Business

The Bureau of Internal Revenue (BIR) requires online sellers and freelancers to pay taxes and register as e-commerce boom amid pandemic.

In its Revenue Memorandum Circular No. 60-2020, dated June 1, entrepreneurs using digital platforms for their business are now required to pay taxes. Those who make money on digital platforms should “ensure that their businesses are registered pursuant to the Tax Code, as amended, and that they are tax-compliant,” the BIR said in a memo.

It also includes “other stakeholders involved such as payment gateways, delivery channels, internet service providers, and other facilitators.” BIR also encouraged online sellers or those whose businesses are done through electronic or digital means to “voluntarily declare their past transactions.”

Aforementioned tax payers should comply to these:

Should be registered with the BIR
Should issue proper receipts/invoices
Should keep books of accounts
Should file and pay tax returns on time.

Those non-compliant with the registration or update requirements and those who failed to declare past due taxes shall be imposed with applicable penalties under the law, and existing revenue rules and regulations, the BIR warned.

BIR also noted that the tax system is based on “net income” so if your income, after deducting expenses, is small, then your tax is also small. If your profit is just 10 or 20 per item and exceeds the total of 250,000 a year, you will be subjected to the income tax.

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