Dominguez ordered BIR to study other countries’ tax practices on digital transactions.
DOF — Finance Secretary Carlos Dominguez III ordered the Bureau of Internal Revenue (BIR) to study other countries’ tax practices on digital transactions.
Dominguez has ordered the BIR to form a unit dedicated to tracking sales of goods done online and to coordinate with their counterparts in other countries to determine how to tax digital transactions properly.
In a statement, he told the tax bureau that they should consult with their counterparts in Korea or Russia in order to find out how to tax digital transactions properly and effectively.
“We have to catch up with these guys,” he said, referring to the surge in online sellers as most consumers have turned to buying goods via digital platforms amidst the pandemic.
The Department of Finance said that BIR Commissioner Caesar Dulay has already discussed with the tax bureau’s National Investigation Division (NID) how this can be done, initially through a task force that will monitor the sales of services and goods done through the internet.
Similarly, a proposed measure imposing a 12 percent value-added tax (VAT) on digital transactions was approved by the House of Representatives on 3rd and final reading.
The proposed House bill sought to amend Section 105-A of the National Internal Revenue Code with a provision making a non-resident digital service provider, such as Spotify, Netflix, and Lazada, liable for collecting, assessing, and remitting the value-added tax on the transactions that went through its platform.
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The measure defined a digital service provider as “a service provider of a digital service or goods” to a customer via “operating an online platform for purposes of buying and selling of goods or services or by making transactions for the provision of digital services on behalf of any person”.
Apart from online sellers, the tax bureau was also keeping tabs on the tax compliance of social media “influencers” in the Philippines.
The tax bureau earlier said that it was investigating an initial list of 250 “influencers” to check on their tax compliance. According to the Bureau of Internal Revenue, Letters of Authority (LOAs) for the conduct of investigation were already issued to certain social media “influencers” found to be “top earners” in their field.
Social media “influencers” (SMIs) who earned money from their posts on digital media, according to the BIR, were classified as “self-employed individuals” or persons engaged in trade or business as “sole proprietors”.
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