Taxpayers’ Obligations in Relation to Online Business Transactions

Electronic commerce (e-commerce) or simply “online buying and selling” is no longer new. It has been flourishing throughout the years due to the continuing advancement of technology. Recently, as people are forced to stay at home to contain the spread of the global pandemic, COVID-19, the drastic increase in digital transactions has been more evident.

To keep up with the surge of online business transactions, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular (RMC) No. 60-2020, dated June 1, 2020 which was approved on June 10, 2020. This circular serves as a due notice to all persons conducting business transactions through any form, especially the use of any electronic platforms and media, to ensure that their businesses are registered and in compliance with the tax laws.

Quoting the RMC No. 60-2020, the BIR advised, “All those who will register their business activity and/or update their registration status not later than July 31, 2020 shall not be imposed with penalty for late registration.” Moreover, businesspersons are encouraged by the taxing authorities to declare past transactions voluntarily, subject to pertinent taxes, without corresponding penalty when declared and paid on or before the aforementioned date. The BIR also included the basic registration guidelines in the above-mentioned circular.

It shall be noted that the mandated registration of online sellers is not a new BIR ruling. In fact, in 2013, the BIR already issued RMC No. 55-2013 that reiterates online sellers’ obligation to register and pay taxes. This particular RMC cites the following policies and guidelines applicable to every business establishment, including online shops:

  • Register the business at the Revenue District Office (RDO) having jurisdiction over the principal place of business/head office (or residence in case of individuals);
  • Secure the required Authority to Print (ATP) invoices or receipts and register Secure the required Authority to Print (ATP) invoices or receipts and register books of accounts for use in business; for use in business;
  • Issue registered invoice or receipt, either manually or electronically, for every sale, barter, exchange, or lease of goods and properties, as well as for every sale, barter, or exchange of service. The said invoice or receipt shall conform to the information requirements prescribed under existing revenue issuances;
  • Withhold required withholding taxes and remit the same to the BIR;
  • File applicable returns on or before the due dates, pay correct taxes and submit information returns and other tax compliance reports; and
  • Keep books of accounts and other business/accounting records within the time prescribed by law.

In order to avoid the imposition of penalties in the future, all businesspersons, especially online sellers, are encouraged to comply and register their businesses with the taxing authorities. Many tax and accounting professionals are willing to provide assistance with the process. It is however highly recommended to engage with competent professionals who integrate excellence and compassion in providing services for the best client experience and compliances with the taxman.

M.P. Camaso and Associates is living the tradition to pursue excellence and to go an extra mile in helping our clients with their business needs. We offer various services depending on the objectives of the Company. Our team is more than willing to assist you in registering your businesses pursuant to the provisions of above RMCs, in securing the related requirements and permits, and/or in maintaining your books and compliance with the applicable tax laws.