Earlier today, we published this article and from what BIR Commissioner Kim Jacinto-Henares said it appears that they’re taxing platform operators or buy-and-sell sites for the wrong reason.
Here’s what BIR Commissioner Kim Jacinto-Henares said in the report.
“We will file cases against sellers who fail to issue receipts and pay taxes, but we will also file cases against the websites which provide such service,”
Under Revenue Regulation 12-2011, “it shall be the primary responsibility of all owners or sub-lessors of commercial establishments/buildings/spaces to ensure that the person intending to lease their commercial space is a BIR-registered taxpayer.”
“In the same way, if you operate a buy and sell website, you have to make sure that your members or subscribers are registered with us. These websites have to make sure that the sellers are issuing receipts, otherwise, they will also be held responsible,”
“It’s just a matter of them following what the law provides, and us implementing what the law states,”
“Their businesses should be registered to us, and they should be paying the corresponding taxes. Otherwise, we will run after them,”
She said the bureau need not issue a revenue regulation requiring online sellers to issue receipts and invoices, since the National Internal Revenue Code (NIRC) already mandates sellers and service providers to issue receipts “for each sale or for service valued at P25 or more.”
Section 237 of the NIRC provides that “all persons subject to an internal revenue tax shall, for each sale or transfer of merchandise or for services rendered valued at P25 or more, issue duly registered receipts or sales or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service.”
In short, BIR Commissioner Kim Jacinto-Henares is treating platform or web site operator such as Sulit.com.ph, ebay Philippines and the like, as they would treat Mall Operators like SM or Ayala Malls that’s why they need to pay taxes for the revenue that they’re getting from rent or lease, as to how did they (she) came up with such analogy is really beyond my understanding.
The problem with BIR Commissioner Kim Jacinto-Henares comments is that majority of these Buy-and-Sell site’s main source of revenue are from ads, services and premium service that they provide to users and not from rent or lease. Sulit.com.ph for example (a well known buy-and-sell sites) provides free service to it’s users who wants to create an ad and they’re not like mall establishment that require stalls to lease a certain period (usually 6 months).
The only product that Sulit sells to it’s users or member are what they call “Sulit Gold” (SG) which is 1 SG = Php 1, since Sulit.com.ph is a duly registered company in the Philippines and doing transaction in the Philippines, I’m sure they’re doing their duties as a Philippine company.
BIR also want these Buy-and-Sell sites to verify if users or sellers are BIR-registered taxpayer, again like those businesses who will rent stalls in Malls are already established businesses that already have the necessary permits and documents to do business in the Philippines and unlike users of a Buy-and-Sell site (like Sulit.com.ph) are just ordinary Juan Dela Cruz, so rather than comparing Buy-and-Sell site to malls, they’re more like those stalls in a plea market, streets a.k.a. “bangketa”, sari-sari store or those garage sale, even if resellers on these web sites have a legitimate brick-and-mortar store they’re just using the internet as another sales channel and I’m pretty sure they have all the necessary permits and documents for their business and if they don’t, I think it’s NOT the fault of the web site operator but that of the owner of the business.
Another point that BIR is missing, is that web sites like Sulit, Ensogo, ebay Ph and Multiply are protected by laws like the Digital Millennium Copyright Act (DMCA), with these comments, I wonder if someone is giving all these “bad” advise to the BIR Commissioner Kim Jacinto-Henares and if BIR will also target those blogs with ads, who knows they might compare them blogs (with ads) to TV Stations.
I’m not saying that don’t tax these Buy and Sell sites, every Filipino company have their own duties to fulfill but base on what BIR Commissioner Kim Jacinto-Henares said, it’s as if She (BIR) still don’t understand how Internet or in this case e-commerce works.
Since BIR is indeed taxing these company for the wrong reason, RJ David (Co-Founder of Sulit.com.ph) may have a point when he suggested “to invite all major online players and sit down to discuss this topic.” which is I think a good idea and will allow BIR to really know how e-Commerce works. I mean how it REALLY REALLY REALY Works!!!
Inspired by an article from thebobbery.
Image from Inquirer