The law may be harsh, but it is the law.
Malacañang Palace yesterday expressed support for the Bureau of Internal Revenue’s (BIR) plan to tax online businesses despite widespread criticism, saying that doing so is just following the law.
Presidential Spokesman Harry Roque said in his virtual presser that the law was not new, and was enacted during the time of then-President Benigno “Noynoy” Aquino III.
“We understand that times are hard. But this policy is not new; this policy to tax online sellers started during the time of Kim Henares when she was still the BIR commissioner during President Noynoy Aquino’s term. We are just following the instruction and the law that was started during President Noynoy Aquino,” Roque explained in English and Filipino.
Sellers have called out the government for its plan, which has been generally perceived as cruel, given that the economy has suffered due to the pandemic. The Duterte administration assured online entrepreneurs, estimated to be at least 900,000, that only those earning more than PHP250,000 (US$4,992) per year would be taxed.
However, this means that businesses that earn as little as PHP21,000 per month (US$419) will have to pay the BIR.
Entrepreneur and writer Rose Fabregas, who started selling just this month, is one of the many critics of the government’s plan. She told Coconuts Manila that the BIR should run after big businesses instead of micro-entrepreneurs. Fabregas resorted to selling food products after writing gigs became scarce due to the pandemic.
“As a new online seller, I would say that the income [from selling online] helps [me]…From what I know, there is a tax bracket, and maybe for bigtime online sellers, it’s OK to comply and register their businesses. But for the small-time sellers, I hope they don’t impose it. They should allow citizens to earn a little, especially because of the situation now,” she said in English and Filipino.
“The government should know (and they shouldn’t pretend to be stupid) that they cannot sustain even the basic needs of citizens during this whole quarantine period. And before [they chase after] the small-time [sellers], start-up online businesses, can they run after POGOs first?” she asked.
Philippine offshore gaming operators (POGOs) are gambling companies that employ mostly Chinese nationals. Such businesses are notorious for being tax-dodgers. The BIR reported that 60 POGOs failed to pay PHP50 billion in taxes in 2019.
A businessman who wishes to be identified as Michael is also displeased by the government’s plan. His meat-selling business started in September 2019, months before the pandemic. Yet, with the lockdown implemented in his hometown of Pasig, he and his family had to resort to selling their products online.
“Of all the people they had to tax, they had to tax online sellers,” he complained to Coconuts via chat. “I know we don’t have to pay taxes if we earn below PHP250,000 a year, but we still had to pay for registration, like, for example, mayor’s permit. Getting these things are such a big hassle [for entrepreneurs].”
“I’m aware that this [law] has been implemented for quite a while. So we can’t do anything but follow it,” he said.
Meanwhile, Senator Sherwin Gatchalian said yesterday that going after online merchants could prove to be costlier for the BIR in the long run. He said the administrative costs of monitoring and auditing such businesses could end up being higher than the taxes that the government could collect from online sellers.
Read more Coconuts Manila articles here.
This article, Malacañang backs plan to tax Pinoy online businesses despite criticisms, originally appeared on Coconuts, Asia's leading alternative media company. Want more Coconuts? Sign up for our newsletters!