The Bureau of Internal Revenue (BIR) has announced that online merchants with earnings amounting to more than P500,000 annually are now subject to a 1-percent withholding tax.
The government is losing substantial revenue as it struggles to impose taxes on digital transactions and non-resident digital service providers amid the digital commerce boom, said a law expert at a webinar organized by state think tank Philippine Institute of Development Studies (PIDS).
BIR deputy commissioner Marissa Cabreros has stressed the need for taxation in the digital economy to level the playing field between traditional enterprises and digital businesses as the economy shifts from brick-and-mortar to virtual.
The Department of Finance said the proposed law will level the playing field between digital and traditional businesses, especially those that cannot shift to the digital platform.
Fans of online shopping and Netflix may soon find themselves shelling out more than the usual after the House of Representatives on Monday, Nov. 14, approved on third reading House Bill 4122 which imposes tax on digital transactions and subscriptions.
The government needs to adopt a well-thought-out strategy and policy package in taxing the digital economy, according to the deputy commissioner of BIR’s legal group.
The Department of Finance (DOF) said on Wednesday, Jan. 27, that it expects the full nationwide implementation this year of several digitalization projects to improve tax administration in step with its goal of utilizing new technologies to boost tax compliance and fight corruption.
Badly needing revenues to arrest the slide of the local economy, the government is moving to introduce tax on the digital economy, particularly on video-streaming companies and large online sellers.
Sen. Sherwin Gatchalian has asked the Bureau of Internal Revenue (BIR) to defer its plan to impose taxes on small-time online sellers amid the Covid-19 pandemic, saying that the proposed taxation at the height of the economic and health crisis is ill-timed and insensitive.
