MANILA, Philippines – The Bureau of Internal Revenue’s recent pronouncements about taxing online traders will only hinder the Philippines’ e-Commerce sector, industry watchers are warning.
Janette Toral, a technical consultant of the congressional oversight committee for the e-Commerce Law, said the BIR’s statements, apart from being vague, were made without consulting e-commerce stakeholders, and could end up hurting small online traders, and the growth potentials of the sector as a whole.
Last week, the BIR issued a warning against online sellers that don’t issue sales invoices for every transaction closed, highlighting the need for these online entrepreneurs to register with the BIR.
“If they are not going to be clear about the process, it may end up scaring off [potential entrepreneurs],” Toral told InterAksyon.com via phone interview.
Toral said the BIR’s statements may not be a total deterrent to the e-commerce industry, but at the very least, it could push small entrepreneurs to hide their true identities online, which would only make it harder on the part of the BIR.
Toral, who was a key proponent in the drafting of the e-Commerce Act of 2001, said the BIR must clarify which types of businesses it intends to go after so as not to create confusion among online traders.
“Ang kailangan nilang gawin, i-clarify up to what point mo macoconsider yung (What they (BIR) need to do is to clarify up to what point they consider a..) person as operating like an established business online,” she said.
In the highly personal and social dynamics of the Internet, Toral pointed out that there are a lot of one-time and seasonal entrepreneurs who do not earn revenue from their ventures on a regular basis to be able to keep up with the standard requirements of the BIR.
Toral cited the examples of gift-makers or pastry sellers online, which only become active around the time of holidays, such as during Christmas, and only earn one-time revenues unlike other establishments with a steady stream of income.
With BIR’s vague pronouncements, Toral said it may end up discriminating against online merchants, which goes against the implementing rules and regulations of the e-Commerce Act.
“E-Commerce should be tax-neutral, meaning whatever is applicable offline should be the same online,” Toral explained. “Kailangan nilang pag-aralan nang mabuti ito to the point na hindi siya mag-di-discriminate (They (BIR) should study this move thoroughly as to not discriminate) against online [traders] ”
All talk, no action
At face value, serial technopreneur Abraham Olandres – also known as Yugatech online – said the BIR’s recent statements only seek to scare off online sellers into compliance without adding anything of value to the industry.
“It’s more talk, less action,” Olandres told InterAksyon.com in a phone interview. “The BIR doesn’t have the resources and the manpower to approach this in an efficient and equitable manner.”
Olandres, who owns several business ventures both based online and offline, said he fully complies with the BIR’s invoicing requirement.
But Olandres’ ventures are already registered under a corporation and, until very recently, had been his full-time undertaking, which makes his case very different from the myriad of small-time sellers online.
Without carefully studying the mechanics of online commerce by consulting with industry players, Olandres said the BIR “will only be spending more for manpower than the revenue they can collect from online sellers.”
“These are micro-businesses. Nangongolekta ba sila ng tax sa nagbebenta ng mani sa daan (Do they (BIR) collect tax from the peanut vendors in the streets)? There are businesses that are supposed to be taxable na hindi nila nahahabol (that they can’t run after), how much more online?” he said, echoing the sentiments of scores of online entrepreneurs that recently assailed the BIR’s recent initiative.
Olandres said the e-Commerce industry in the country is at its very nascent stages for the government to be carefully scrutinizing the players in the sector.
If anything, he said the government should be allowing the e-Commerce sector to fluorish by imposing a moratorium against tax on online traders, if only to continuously promote its growth and contribution to the economy.
“Online commerce only comprises 1 percent of total retail revenues,” Olandres pointed out. “If we’re talking about revenues, bakit sila tututok sa (why focus on the) 1 percent?”
Olandres and Toral were in agreement that the BIR should first consult with the industry before pushing through with such a mandate, even as they recognize the government’s task to collect taxes from businesses, a point raised earlier by e-Commerce giant Sulit.com.ph.
“I hope they do this more as a means to protect consumers,” Toral suggested, rather than the agency’s keen focus on ramping up its revenue-collection efforts.
“Importante na magkaroon ng proper consultation para ma-distinguish kung sino ba talaga ang affected dito (the important thing is there should be proper consultation to distinguish who are going to be affected),” she added
