By Justine Irish D. Tabile, Reporter
THE retail industry said international online sellers should be taxed equally compared with physical stores in the Philippines, noting that the industry is disadvantaged when online sellers’ transactions go untaxed.
Philippine Retailers Association President Roberto S. Claudio said one bill he had hoped that President Ferdinand R. Marcos, Jr. would highlight during his third State of the Nation Address was for a measure that would impose value-added tax (VAT) on online transactions.
“I wish that the proposed bill to impose VAT on all online transactions of foreign merchants in marketplaces would have been prioritized to earn more revenue for the government,” Mr. Claudio told BusinessWorld via Viber.
Mr. Claudio said that a tennis racquet sold by his sporting goods business is charged 12% VAT, while an online merchant from China selling the same tennis racquet is subject only to 1% withholding tax.
“Can you not see the unlevel playing field that the government has created with store retailers and Chinese online retailers?,” he said.
“Online transactions are running in the billions now. Imagine how much the government is losing in terms of tax revenue,” he added.
On July 15, the Bureau of Internal Revenue (BIR) started collecting a withholding tax on online platforms and sellers through Revenue Memorandum Circular 79-2024.
The BIR granted an extension for online sellers to comply with Revenue Regulations (RR) 16-2023, which imposed a withholding tax of 1% on half of the gross remittances by e-marketplace operators to sellers and merchants.
The regulations cover marketplaces for online shopping, food delivery, lodging accommodation booking services, and other online marketplaces.
Despite the RR’s purpose of leveling the playing field between brick-and-mortar stores and online marketplaces, Mr. Claudio said that it is still not enough.
“It’s completely unfair to local retailers. Our contention is that online Chinese retailers must be subjected to the same conditions imposed on local retailers, such as in the areas of taxation, duties, intellectual property, consumer protection, and product standards,” he added.
Separately, Philippine Chamber of Commerce and Industry President Enunina V. Mangio said that most of the transactions done through e-commerce platforms are not monitored as thoroughly as those of brick-and-mortar retailers.
“All our offline retailers pay their taxes, but those selling online who adopt the same pricing for the same products are not monitored to see whether they are paying taxes or not,” she said.
“So what we want is for the government to charge e-commerce sellers the right taxes, or whatever it is that is being paid by offline retailers,” she added.
She said that the imposition of a 1% withholding tax is a welcome move, signaling that online transactions will now be monitored.
A report by Google, Temasek Holdings and Bain & Co. projected the Philippine digital economy’s growth at between $80 billion and $150 billion in gross merchandise value by 2030.
Around $60 billion of the total is expected to come from e-commerce, with transport and food generating $5 billion, online travel $5 billion, and online media $10 billion.
