Tax Articles

Registration Requirements for Online Sellers (Part II)

By: Atty. Rodel C. Unciano

Atty. Rodel C. Unciano Partner   +632 8403-2001 loc.380 This email address is being protected from spambots. You need JavaScript enabled to view it. View Profile

The mandatory registration requirements for online sellers under Revenue Regulations (RR) No. 15-2024 has drawn some concerns from various stakeholders, particularly from small online users who comprise the majority of users.

To recall, pursuant to RR 15-2024, all persons engaged in the sale and/or lease of goods and services through website, webpage, page, platform, or application who does not have a brick-and-mortar store, are now required to register with the appropriate district office of the Bureau of Internal Revenue (BIR), that is, with the BIR district office having jurisdiction over the place of residence for individuals or principal place of business registered with the Securities and Exchange Commission (SEC) for juridical entities.

Covered Persons

So, who are covered persons? Under Section 3 of the regulations, any natural or juridical person who is engaged in trade or business in any form which is conducted online is covered.

Trade or business refers to any activity carried on for the production of income or profit from selling and/or leasing of goods or properties, and/or performing services. On the other hand, online business refers to any commercial activity over the internet, whether buying or selling goods and/or services directly to consumers or through a digital platform, or any business that facilitates commercial transactions over the internet between businesses and consumers. It includes e-commerce platforms, e-marketplace, online sellers/merchants, and e-retailers.

So, practically, all persons doing business carried online are covered. Note that to be covered, the person must be engaged in trade or business. Apparently, therefore, a mere user who uses the online platform not for the purpose of generating income is not covered. So, therefore, anyone who publishes his content creation to any social media platform for mere entertainment purposes and not for a fee and does generate revenue from the said content creation, is not covered.

But as I understand, an uploaded content creation may not generate revenue for the time being but depending upon the parameters set by the platform owner, a content creation may potentially generate revenue over time. So, in that case, when will that person be considered covered? Perhaps, it helps if the BIR can set a more detailed parameters for the guidance of thousands of small users who in fact do not derive substantial amount from their content creation.

Obligations of covered persons

All covered persons operating a business through a website, social media, or any digital or electronic means, shall display conspicuously a copy of their BIR Certificate of Registration (COR) on their website, webpage, account, page, platform, or application in a manner that is easily accessible and visible to buyers or customers visiting the seller’s webpage, account, page, platform or application.

Note that mere uploading of the BIR COR on the website, webpage, or platform does not comply the requirements. The COR has to be displayed on the website, webpage, or platform conspicuously and shall be at all times easily accessible and visible to buyers or customers visiting the seller’s webpage, account, page, platform, or application.

The posting of BIR COR or proof of BIR registration is not new at all. It has been a requirement for taxpayers to post or exhibit their original BIR COR at the place where the business is conducted in a way that is clearly and easily visible to the public. But the posting of a BIR COR or proof of registration on a website, webpage, or platform is something new. I hear some worries from stakeholders raising as concern the issue on the violation of their right to privacy. Is this requirement indeed violative of the right to privacy?

A website is readily accessible by anyone. So, anyone can access the data posted therein including the BIR COR. And the website owner does not have a control over those who would access their website. Can the BIR impose upon them the obligation to disclose information to the public against their will?

Penalty for non-registration

Any person who is engaged in any trade or business in the Philippines and fails to register the same with the BIR shall be administratively and criminally liable for fines and penalties. Operators of digital platform, including e-marketplace platforms allowing online sellers/merchants to engage in business without the required BIR registration shall be construed to be doing an act of aiding or abetting in the commission of the offense. And pursuant to the provisions of the Tax Code, any person who willfully aids or abets in the commission of a crime penalized under the Tax Code shall be liable in the same manner as the principal.

Under the regulations, penalty for failure to register includes the issuance of a Closure/Take Down Order to close the business operations of a covered person. Note that the Closure/Take Down Order is not limited to the physical closure of the business establishment but includes the restriction of the usage of the website, webpage, account, page, platform, or application used in the conduct of trade or business in order to prohibit covered persons from selling, posting, listing or offering goods and/or services for sale and/or lease.

Is this not something violative of the person’s right to freedom of speech and expression which is guaranteed under the Constitution? Is closure of business or restriction of the use of a website a commensurate form of penalty particularly for digital platforms or online channels on ground of not being able to ensure that persons making use of their platform is not duly registered with the BIR?

Perhaps, there is a need for another round of consultation with the stakeholders in order to address all of these concerns.