The advent of Covid-19 pandemic brought an immensely increase in the number of online sellers. This is due to the constraint of being in face to face situation caused by the pandemic. Thus, business activity is now being submerged into online world. But there are businesses which are unluckily unable to survive during the pandemic. Thus, their employees also lost their jobs. Unemployment increases. Majority, of those affected individuals began to be part of the online selling. It is somehow becoming their current source of living as it became prevalent during this times.
On June 2020, the BIR issued Revenue Memorandum 60-2020 entitled “Obligations of Persons Conducting Business Transactions through any forms of Electronic Media, and Notice to Unregistered Business”. It encourages the online sellers in the Philippines to voluntary declare their past transactions and pay corresponding final tax without penalty. Those who fail to register and update registration on previous transactions will be penalized.
This BIR Memorandum gained various criticism among individuals especially online sellers. They highlighted that they only earned meager income and do not have the capacity to pay tax. Their profit is just sufficient for their basic necessities and paying taxes will be burdensome.
Theoretically, tax is an enforced proportional contributions or charges from persons and property levied by the law-making body of the state by virtue of its sovereignty for the support of the government and all public needs. Thus, a theory called Life-blood Principle supports the notion of tax being the primary source of revenue of the government. Without taxation, the government will not function as intended. In addition, tax is being considered as the most powerful inherent powers of the state, as it wires the other power namely police power and power of eminent domain.
In addition, Malacañang Palace clarifies that online sellers earning below ₱250,000 a year won’t need to pay tax, but must register with BIR (CNN, 2020). Thus, the obligations to register and file a tax return even below the threshold of P 250,000, is not excused. It is still an obligation of any subject of taxation, the registration and filing of applicable tax returns even their income falls into (0) zero.
Note that taxation is an inherent power of the government and no one can take it away from the government. A State or government can impose taxes in its territory as long as it within its context. Simply, online sellers earn an income and that income is a Return of Capital and Realized Benefit which generally makes it taxable.
Under taxation, the government also served as steward of the taxes collected as it will be used exclusively for public purpose. Currently, the government is in dire need of funds to make our country survive due to the damages brought by the pandemic. Thus, it will be a great help, even in our small ways, to be a tax compliant.
By: Arrianne G. Cuevas | Teacher II | Bataan National High School-Senior High School | Balanga City, Bataan
