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Online tax evasion

The Bureau of Internal Revenue has warned online sellers who fail to register their business and pay the required withholding tax that their business operations could be suspended through the issuance of closure or takedown orders.

The BIR has been targeting to level the playing field between physical and online stores by regulating them equally and taxing them uniformly. Last July, it formally imposed the one percent withholding tax to online platform providers, which is one percent of one half of the gross remittances of the online platform providers to the sellers of goods and services.

BIR Commissioner Romeo Lumagui advised electronic marketplace platforms, online sellers, and content creators to follow the regulations as soon as possible.

“It is unfair to the retail industry or to sectors with brick and mortar stores if online businesses are not regulated and taxed in the same manner,” he said.

“If physical stores can be closed down through a closure order, online businesses can be closed down through a takedown order,” he added.

The BIR chief also emphasized that the closure of such business operations does not preclude the filing of tax evasion cases under its Run After Tax Evaders program. BIR regulations also provide that lessors, sub-lessors of commercial establishments, and operators of digital platforms are required to ensure that all their lessees and online sellers are duly registered with the BIR.

Lumagui maintained that the BIR will be monitoring digital platforms and e-marketplace platforms like Lazada, Shopee, and TikTok to check if their online sellers and content creators are compliant with BIR registration.

Online sellers, merchants, and content creators have been able to avoid proper taxation for quite some time already, and it is about time that the BIR evolved and caught up with them, if it is only to be fair with all other brick and mortar business establishments that have had to deal with the taxman from day one.

It is a fact of life that may sting for those who have been used to getting away with tax evasion by doing their business online, but even if paying the proper taxes is the inevitable cost of doing business, they should know by now that it is also an important part of nation building.*

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February 2025
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