Since community quarantine started, the Philippines has seen a rise in online transactions, with more and more businesses investing in delivering orders made online, if only to lessen the physical interactions with persons. In the advent of the ever increasing global trend towards online businesses and freelancing, efforts to regulate said transactions have been initiated by the Bureau of Internal Revenue.

Last June 11, 2020, the BIR announced through Memorandum Circular 60-2020, that it is requiring all persons “doing business and earning income in any manner or form, specifically those who are into digital transactions through the use of any electronic platforms and media, and other digital means, to ensure that their businesses are registered pursuant to the provisions of Sec. 236 of the Tax Code, as amended, and that they are tax compliant.”

This means that all types of online businesses and sellers, such as those selling their own services online like graphic designers, freelance content writers, online retail sellers, delivery services, and all other types of freelancers, are required to register their businesses or services not later than July 31. Failure to register shall subject the individual to tax penalties and delinquencies.

Generally, registration as a taxpayer must be done in the Revenue District Office having jurisdiction or control over the place of residence of the individual taxpayer. For taxpayers with no TIN, he or she must first secure a TIN and register his business. For taxpayers with a TIN, but whose business is not registered, individuals must register the business with the RDO where his physical business is present, or, where the taxpayer resides, while non-individuals must update their business activity.

The steps to registering include:

1. Filling up the Registration Form

2. Presenting any government-issued ID that is readable and untampered

3. Other documents required (such as DTI Cert. of business name, or Article of Incorporation)

4. Payments to the New Business Regsitrant Officer posted in the New Business Registrant Counter

5. Securing BIR Printed Receipts or Invoices, or Authority to Print

(Source: https://www.bir.gov.ph/index.php/revenue-issuances.html)

This means that online sellers and freelancers must also start filing their tax returns on time, and be able to withhold the amount of taxes due to the government in the applicable taxing periods. There are instances where employers or contractors who hire said freelancers may withhold the taxes themselves, but for those that do not, it is the freelancer’s obligation to withhold and pay the tax amounts themselves.

In order not to incur any penalties, it would be wise for all online vendors and businesses to consider registering before the July 31 deadline. Penalties for non-payment of tax may include administrative or criminal penalties, depending on the manner in which the taxes have not been paid. Taxes are the lifeblood of the nation, and with the amount of revenue spent by the government during the pandemic, it seems that the bureau has been tasked with finding more sources of taxes to alleviate the nation’s spending and help it recover rather swiftly.