The Bureau of Internal Revenue has ordered online businesses to register and pay taxes by July 31 to avoid being penalized with tax violations.

BIR issued its Revenue Memorandum Circular No. 60-2020 (RMC 60-2020) re: 'Obligations of Persons Conducting Business Transactions Through Any Forms of Electronic Media, and Notice to Unregistered Businesses'. The BIR issued RMC 60-2020 in light of the boom in online businesses due to COVID-19 and the community quarantine.

Also read: How to start digitizing your business

What does RMC 60-2020 say?

RMC 60-2020 reminds all persons doing business, specifically those engaged in digital transactions using digital means (i.e. online businesses), to ensure that their business is registered with the BIR and tax-compliant.

The BIR will also not impose any penalty for the following violations:

Businesses who failed to register and/or update their registration status with the BIR provided they do so by July 31
• Businesses who failed to pay taxes for past taxable transactions provided they voluntarily declare such transactions and pay the corresponding taxes by July 31.

Any business that fails to comply with the registration/update requirements and/or fails to pay taxes for past taxable transactions beyond July 31 will be penalized as provided under the Tax Code.

Online sellers earning less than PhP 250,000 a year would not have to pay income tax. However, all online sellers, regardless of income, would still have to register, or else pay penalties.

The BIR finally reminded businesses to comply with the following:

Issue a registered Sales Invoice or Official Receipt for every sale of goods or services to clients/customers/buyers
• Keep a registered Books of Accounts and other accounting records of business transactions
• Withhold taxes as applicable
• File the required tax returns
• Timely pay the correct taxes

BIR clarification of RMC 60-2020 last 17 June 2020

BIR Tax Deputy Commissioner Arnel Guballa released a statement last June 17 during the government's Laging Handa briefing that online sellers earning less than PhP 250,000 a year would not have to pay income tax. 

However, all online sellers, regardless of income, would still have to register, or else pay penalties.

Guballa also said that online sellers earning less than PhP 3 million a year would not have to pay value-added tax. 

How does RMC 60-2020 affect you?

COVID-19 and the community quarantine have forced many businesses to go online in conducting their business. Many individuals have also engaged in online selling to supplement their income.

RMC 60-2020 reminds the public that conducting your business and transactions online does not exempt you from tax regulations & requirements, particularly on registering your business with the BIR and paying taxes. Be sure to register and/or update your online business with the BIR. You should also pay the corresponding taxes with the BIR for your online transactions. Complying with these requirements will help you avoid hefty penalties from the BIR for violating the Tax Code.

If you need any help with ensuring your business is tax compliant and in dealing with the BIR, you can consult our Partner Lawyers specializing in Taxation law who can give you legal advice fast and at affordable rates. Just send us a message on our Facebook page to learn more.


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