Palace clarifies: Online sellers earning below ₱250,000 a year won't need to pay tax, but must register with BIR

Metro Manila (CNN Philippines, June 11) – Malacañang has clarified that not all online sellers will need to pay taxes, but should still register or update their records with the Bureau of Internal Revenue.

Presidential Spokesperson Harry Roque on Thursday justified the decision of the tax agency to require all online merchants, including delivery platforms, to declare their profits from selling retail products online. BIR gave them until July 31 to register and update their tax records, as well as to find a way for them to issue receipts or sales invoices, just like in physical stores.

Roque and Acting Socioeconomic Planning Secretary Karl Kendrick Chua clarified that existing tax laws will apply to online selling, which saw a surge in activity as people sought to find other ways to make money during the COVID-19 lockdown.

"Talaga naman pong meron tayong exemptions na tinatawag under sa tax reform act [We really have exemptions under the tax reform act]," Roque said.

Chua explained in a Malacañang briefing that annual earnings less than ₱250,000 are tax exempt, referring to the Tax Reform for Acceleration and Inclusion Act that overhauled the system for personal income taxes. Only income above ₱250,000 is subject to taxes.

"Ang pinagkukunan naman po natin para sa COVID-19 ay 'yung pondo na pumapasok primarily sa BIR at sa Customs. Habang tumataas ang pangangailangan natin sa COVID-19, syempre hahanap at hahanap tayo ng pamamaraan para ma-increase ang ating intake ng taxes. Isa po ito sa pamamaraan," Roque said.

[Translation: We're getting the funds for COVID-19 primarily from the collections of BIR and Customs. As our needs for funding rise, of course we will continue looking for ways to increase our tax intake. This is one of the ways.]

The government has missed its tax collection targets so far this year, bogged down by delayed 2019 income tax collections.

"Humihingi lang po ako ng pag-intindi sa ating publiko dahil kung wala naman tayong kaban, wala tayong ayudang maibibigay [I'm asking for the understanding of the public because if we don't have money, we cannot provide cash aid]," he added.

Several lawmakers said government should prioritize chasing the tax dues of Philippine Offshore Gaming Operators or POGOs, rather than cut the earnings of local online retailers making a temporary living via social media or e-commerce channels.

READ: BIR urged to prioritize taxing POGOs over online sellers

Roque says the government needs all the additional revenues to fight COVID-19, with the Department of Finance identifying more than ₱600 billion in spending.

Some ₱437 billion worth of loans are also being eyed, with multiple credit lines tapped in the past two months from local and foreign sources.

Chua, however, said these can still be paid off with ample fiscal space.