Taxing online business costlier, says Gatchalian

Sen. Sherwin Gatchalian (Henzberg Austria/Senate PRIB)

MANILA, Philippines — The taxman should review his math on this one.

An order of the Bureau of Internal Revenue (BIR) requiring some 900,000 online sellers in the country to register and pay taxes may just be a losing proposition, according to a senator.

Sen. Sherwin Gatchalian, Senate economic affairs committee vice chair, said the government could be spending more for the administrative costs of monitoring web-based merchants and auditing their sales than the revenue that the BIR could generate from them.

Instead of going after small businesses, the BIR should just focus its resources on collecting some P70 billion in unpaid taxes from 24 Chinese-owned online gambling companies, more known as Philippine offshore gaming operators (POGOs), Gatchalian said on Sunday.

“For me, this [decision of the BIR] is the height of insensitivity,” he said, pointing out that most online sellers were people who had lost their jobs due to the pandemic.

Expensive move

“In [introducing new] taxation, timing is very important. In this time of pandemic, it’s not right to impose taxes on new or small entrepreneurs,” Gatchalian said in a radio interview.

“The administrative costs in the registration, auditing and monitoring of [online sellers] could be more expensive than the taxes that the government would be able to collect from them,” he argued.

Delivery services

The senator said the BIR’s move could also expose more people from contracting the new coronavirus, noting that 99 percent of business owners in the country were engaged in micro, small and medium enterprises.

In addition, he said it could adversely affect couriers for delivery services, most of whom were drivers of motorcycle taxis that the government had temporarily banned to stem the contagion.

Should the BIR insist on pushing through with its plan, Gatchalian said the registration should be at least be done through the internet to ensure the safety of online merchants and the public in general.

“Imagine if all the small business owners would be required to go to the BIR [offices] to register. It would not only lead to the transmission [of the coronavirus] but also cause [logistical] problems,” he said.

Despite the mounting opposition from lawmakers, the Department of Finance stood firm on the BIR decision, with Finance Undersecretary Antonette Tionko saying it was not designed to go after online sellers for “unreported sales or unpaid taxes.”

Tionko said the program was crafted to “encourage those who are engaged in online businesses to register with the BIR.”

‘Insensitive, unneccesary’

Senate Majority Leader Juan Miguel Zubiri shared Gatchalian’s position, saying the BIR order was not only insensitive but also totally unnecessary.

“We understand that our government needs revenue, but we must focus on what’s important … Definitely, taxing small online businesses is not the answer,” Zubiri said in a Viber message.

“First of all, many of these online sellers are trying to survive during this time of pandemic. [To] harass them on their last means of income is heartless, to say the least,” he said.

The Senate leader said he and his colleagues would not support the revenue measure and that they would instead push to impose bigger taxes on Pogos that have been “growing within our country like a virus.”

“Those with devious minds planning these tax schemes will have little or no support at the Senate for these measures,” he said.

“Why make small enterprising and entrepreneurial [Filipinos] suffer from the threat of taxation and allow foreign Pogo [owners] to operate while evading or underpaying their taxes?” he added.