‘Sin’ products sold online up for tax audit

MANILA, Philippines — The Bureau of Internal Revenue (BIR) is double-checking the tax payments of people selling cigarettes and liquor on digital marketplaces.

In a text message on Monday, BIR Deputy Commissioner Arnel Guballa disclosed an “ongoing verification” of online sellers’ payments of “sin” products’ excise, as well as 12-percent value-added tax (VAT).

Legal cigarettes and alcoholic drinks were being slapped with excise, and must also be levied with VAT on consumption.

Since some online sellers are not BIR-registered, they unlikely paid VAT to the country’s biggest tax collection agency, unlike brick-and-mortar stores that remit the mandatory levy.

Guballa said the BIR would collect all taxes due from resellers of cigarettes and alcoholic beverages online.

On Saturday, Finance Secretary Carlos Dominguez III said the agency would move to stop online sales of cigarettes and liquor as these products might be accessible to minors if left unchecked.

But cigarette companies like PMFTC Inc. said they had age-gating in place so their resellers double-checked buyers’ government-issued IDs when delivering orders to ensure their products don’t end up with minors.

‘Study further’

Trade Secretary Ramon Lopez was supporting Dominguez’s plan to ban unregistered sellers and resellers of sin products.

“We should ban online the cigarettes, liquor, e-cigarettes and similar devices, if sellers are not registered and they don’t get profiles of buyers, if they don’t assure that buyer is no longer a minor, and if there’s no standard compliance of those products,” Lopez said in a statement.

“We are discussing this with the Department of Finance as we study further and set up a system where online-selling platforms must be legitimate and registered with the Department of Trade and Industry (DTI) and the BIR—those that can assure profiling of buyers (up to receiving), and product standards,” Lopez said. “We allow only those asking for age and only delivering to buyers with the right age.”

Buyers’ profiles

“These can be done by direct company online sales and major platforms that should be registered — those that will get profiles of buyers. Outside these registered groups, they must be banned,” he added.

“Online selling is the future. And it will provide added revenues also for the government because we make sure only registered and taxed products are being sold,” he said.

For Lopez, selling cigarettes and liquor online should not be entirely prohibited — “if it is allowed in brick-and-mortar [stores], it must be allowed online, as long as registered and standard-compliant and original products are sold, especially on sin products because any fake item means tax evasion.”