BIR Raises P45 Billion From Online Sellers, Influencers

The Bureau of Internal Revenue (BIR) raised nearly P45 billion in taxes from online sellers and social media influencers last year, but lawmakers demanded the agency improve its efforts to capture all players in the digital economy.

BIR Assistant Commissioner Clavelina Nacar informed Congress on Monday, March 14, that taxes collected from online sellers and social media influencers grew by about nine percent to P44.68 billion in 2021, from P41.04 billion in 2020.

Almost all of the amount came from online sellers offering their goods in e-commerce channels like Lazada and Shopee, while social media influencers producing digital content on Facebook, Twitter and YouTube, among others, contributed P3.72 million.

Based on data, the taxes gained from internet activities last year only exceeded by around three percent the pre-pandemic total of P43.28 billion in 2019. At the time, the BIR generated P43.27 billion from online sellers and P1.12 million from social media influencers.

House ways and means committee chairman Joey Salceda questioned the BIR on why the tax haul only grew by P1.4 billion in a full year under the pandemic in 2021. He asked why the tax effort appears to be undervalued when compared to the size of the digital economy.

An economist, Salceda said there can only be two reasons for the disconnect: either the taxman has yet to capture the entire market of online sellers and social media influencers, or the consumer swing to digital transactions may be a myth after all.

According to London-based GlobalData, Philippine e-commerce was estimated to expand by at least 15 percent to P264.5 billion in 2021, as Filipinos shift to online shopping to avoid physical contact and maximize internet access.

Likewise, GlobalData projects that e-commerce transactions here will increase by an average of 17 percent in the first half of the decade to a record P495 billion by 2025.

BIR Assistant Commissioner Larry Barcelo said the agency has demanded e-commerce giants Lazada and Shopee to submit their data on the number of online sellers working with them. He also said regional directors are looking into the tax compliance of social media influencers.

In response, Salceda told the BIR to strengthen its efforts in collecting the taxes of internet-based individuals and firms. He reminded the agency to investigate the tax compliance of popular sites like Facebook, which he said earns a minimum of $1 billion in advertising sales from the Philippines every year.

On the other hand, Nacar said taxes raised from nonresident foreign corporations rose by more than five percent to P32.32 billion last year, from P30.71 billion in 2020.

However, income earned by nonresident foreign corporations – firms that derive revenues from the country even without presence of a branch – jumped by over 10 percent to P288.45 billion, from P261.08 billion.

Online businesses

The Department of Trade and Industry (DTI) and other agencies have issued guidelines for online businesses, which include a three-day safe harbor period for e-commerce platforms to take down posts that violate laws.

At a press conference on Monday, DTI director Melquiades Marcus Valdez II said the Joint Administrative Order (JAO) 22-01 of the department with the agriculture, health, environment and natural resources departments, Intellectual Property Office and National Privacy Commission, is a reiteration of rules and policies applicable to online businesses to build consumer confidence in online transactions.

While the JAO consolidates existing laws, he said it has a new provision on the three calendar-day safe harbor period given for the e-commerce platform to take down online posts of the seller, e-retailer or by the platform that violates rules and regulations.

Upon notice from the concerned authorized agency, he said the e-commerce platform or marketplace will have to take down posts considered as violating existing laws.

Failure to take down the post within three days will be construed as an intentional and overt act that shall aggravate the offense charged.

He said the safe harbor period is being provided as a result of public consultations with online businesses, citing a challenge in monitoring all the products and services sold and offered online.

Through the JAO, online platforms are reminded to make sure merchants selling on their platforms have secured licenses, permits and other certification requirements, depending on the nature of their business, and of the goods and services they sell.

Food and medicines must comply with Food and Drug Administration registration, while consumer products must contain Philippine Standard marks or Import Commodity Clearance stickers to show these comply with product standards.

Trade Undersecretary Ruth Castelo reminded online merchants to comply with the provisions of the Consumer Act and the Price Act. She said the JAO would take effect 15 days after its publication yesterday. – With Louella Desiderio