As far as the Department of Finance (DOF) is concerned, those who sell online must pay equal taxes as the physical stores do, according to a Manila Bulletin news report. Take note that the Philippines continues to recover from the economic downturn of COVID-19 and the coronavirus itself no longer poses a danger to the nation.
To put things in perspective, posted below is an excerpt from the Manila Bulletin news article. Some parts in boldface…
The Department of Finance (DOF) asserted that online sellers should be subject to the same tax obligations as traditional brick-and-mortar business owners for the sake of fairness.
Finance Secretary Benjamin E. Diokno said the collection of withholding tax on online sellers by the Bureau of Internal Revenue (BIR) is driven by the principle of fairness, and it does not constitute a new tax.
Withholding tax is a type of tax collected from various income sources, including salaries, wages, interest, and other earnings.
“It’s a matter of fairness because if you buy from a regular store, you have to pay taxes. But here [in online business], you don’t have to pay, and that’s unfair,” Diokno told reporters.
Diokno stressed the need for individuals to view the tax system as fair and willingly fulfill their tax obligations.
The BIR has proposed a new rule that would require online platform providers, such as Lazada and Shopee, to withhold one percent of the money they pay to their partner sellers. This withholding tax would be applied to half of the total amount being paid.
The BIR explained that this is not an additional tax, but rather a way to enforce existing tax laws and ensure proper tax collection.
“It’s not only increasing tax revenues, it’s a matter of fairness. A good tax system should be fair. That should be one of the characteristics of a good tax system, fairness,” the finance chief said.
BIR Commissioner Romeo D. Lumagui, Jr. earlier said the tax agency aims to begin collecting a creditable withholding tax from online platform partner merchants by the fourth quarter of 2023.
Lumagui also said that their objective is to fully implement this tax by next year.
He also explained that the purpose of imposing taxes on online merchants is to ensure a level playing field between traditional brick-and-mortar retailers and those selling on digital platforms or marketplaces.
Let me end this piece by asking you readers: What is your reaction to this recent development? Do you agree with the DOF on taxing online sellers? If you own a physical store selling products, does the presence of local online sellers harm your business?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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