The global economy has undergone a rapid digital transformation, with more transactions shifting the venue from physical stores to online platforms. As e-commerce continues to rise, authorities must keep pace to ensure that laws and regulations are updated and capable of addressing the complexities of the digital economy.
In line with this, the Internet Transactions Act of 2023 was enacted, which stipulates, among other things, that individuals and entities engaged in online trade and business must observe and comply with the policies, laws and regulations of the countries where their products are marketed. This includes mandatory registration with the Bureau of Internal Revenue (BIR), filing of appropriate tax returns and payment of taxes.
On Aug. 15, 2024, the BIR issued Revenue Regulations 15-2024 to prescribe guidelines, procedures and requirements for the implementation of the mandatory registration of persons engaged in business, including physical retail establishments (“brick-and-mortar stores”) and online trade or business. The salient provisions are provided below.
Registration requirement
A person with an online presence or online store for its brick-and-mortar store must register its store as an additional business name attached to the head office or branch and shall not be registered as a branch.
If a person is engaged in the sale or lease of goods or services through a website or application who does not have a brick-and-mortar store, the business must be registered at the BIR district office having jurisdiction over the place of residence for individuals or the principal place of business registered with Securities and Exchange Commission (SEC) for juridical entities.
Posting of Certificate of Registration (COR)
If the person operates a business through a website, or any digital means, an electronic copy of the BIR COR/eCOR on the person’s website, webpage, account, page, platform or application is required. The BIR COR/eCOR must always be easily accessible and visible to the customers visiting the website, webpage, account, page, platform or application.
Responsibility of Operators of Digital Platforms
It is the responsibility of operators of digital platforms and e-marketplace platforms to ensure that all their online sellers or merchants are duly registered with the BIR. Otherwise, this may be construed as an act of aiding or abetting in the commission of the offense.
Penalties
The BIR has the authority to issue a Closure/Take Down Order, which may span to not less than five days, should any covered person doing business in the Philippines fail to register. This order does not preclude the BIR from filing appropriate charges if evidence so warrants.
The Closure/Take Down Order shall only be lifted once the BIR has validated that the violations stated in the order have been rectified and the person concerned has already complied with all the requirements as may be prescribed by the Commissioner.
Other penalties are as follows:
• P1,000 for late registration
• P1,000 per business name or store name for failure to register a business name or store name
• P1,000 for every violation per business name or store name for failure to post BIR COR/eCOR on the place of business, website, webpage, account or online platform
• P20,000 for each branch/store/establishment for lessors/digital platform/e-marketplace operators in allowing lessees or online sellers/merchants to use to engage in business the premises or digital platform without BIR registration
• P20,000 for failure to obey or comply with Closure/Takedown Order
• P5,000 to P50,000 depending on the classification of taxpayer for failure to register head office or branch
Please be guided accordingly.
Source:
P&A Grant Thornton
Certified Public Accountants
