Among Filipinos who actually tried to go cashless in 2023, the average number of days that they successfully managed not to use cash was 10 days, according to the findings of the Visa Consumer Payment Attitudes Study 2024.

Most Filipinos believe that they can go at least a week without using physical coins and bills. According to the study, 82% of Filipinos believe they can go cashless for a day, but that number drops to 68% for three days, and just 52% for a week.

This shouldn’t come as a surprise even for those living in the metro. If you’ve ever gone out to buy a snack from a nearby store – only to realize you forgot to bring any cash – you’ll find that you’re left at the mercy of mobile wallets that aren’t always online.

What about for public transportation? For those commuting by jeep, tricycle, or pedicab, it’s practically impossible to use anything other than cold, hard cash.

If you’re using trains, you might have some more luck going cashless. For instance, commuters using the Light Rail Transit Line 1 can buy single journey QR tickets through Maya. Eventually, you might also be able to tap your Mastercard card to pay for your fares in the Metro Rail Transit Line 3, as well as EDSA and Bonifacio Global City buses (READ: You can eventually tap your Mastercard to pay for MRT3, bus fares).

Likewise, Visa country head for the Phililippines Jeff Navarro said that “discussions are in place with the [Department of Transportation] and all other operator-participants” for a similar tap to pay function for Visa cards in transit stations.

Randolph Clet, head of the Department of Transportation’s automatic fare collection system (AFCS), told Rappler that the goal is to go contactless and cashless for transportation “soon” by enabling commuters to pay for fares using bank cards, QR codes, and mobile payments through near-field communications or NFC. For comparison, other Southeast Asian cities, such as Singapore and Bangkok, have had tap-to-pay functions in their trains for several years now.

But although the Philippines may be lagging behind some of its neighbors, Visa’s country head is confident that we’re headed in the right direction.

“[In] Singapore, you can see there that practically everyone is already using mobile pay. Apple Pay is there. Google Pay is there,” Navarro said. “So, they’re very much ahead when it comes to real penetration and usage already.”

“What we’re seeing in Philippines is directionally it’s already going to that place. The momentum is there. We have critical mass in terms of consumers already adopting this new technology,” he added. “We’re really in a good positive place towards going cashless by 2030.”

Filipinos seem optimistic as one in three believe that the Philippines can become cashless by 2030. In fact, plenty are already trying to drop cash. In 2023, 83% of Filipino consumers attempted to go cashless, which actually places the Philippines second in ASEAN. Vietnam (89%) leads the region while Thailand (81%) is third and Malaysia (76%) is fourth. Singapore (67%) places fifth only because many Singaporeans have already fully embraced cashless payments.

Going digital: 1 in 3 believe Philippines will be a cashless society by 2030

Internet, fraud are still problems

The first step to achieving a cashless society would be to have more Filipinos set up transactional accounts that can be used to pay digitally. This could be by bringing them into the formal banking system through bank accounts or by having them set up mobile wallet accounts.

Navarro said that while the Bangko Sentral ng Pilipinas has yet to release official figures, he estimates that close to 70% of Filipinos now have a bank or e-wallet account.

To reach the remaining 30% of “unbanked” Filipinos, the Visa country head said that banks, fintech companies, and even remittance and currency exchange companies must take the lead in creating “products and services that will allow them to be part of that economy.”

There is still the problem of infrastructure. In 2023, the Philippines’ internet penetration rate stood at only 73.1% of the total population, with some geographically-isolated communities having no internet access. The country’s internet speed also trails others in the region (READ: 91% of PH workers believe internet infrastructure needs to improve faster – survey)

“It’s difficult to do a digital payment if there’s no internet, there’s no Wi-Fi, there’s no nothing. So, that has a natural cycle that will fix itself. So, as to when that becomes available, then definitely digital payments becomes part of the community,” Navarro said, adding that Visa is also exploring possible offline payments solutions.

“We’re trying to work with some of our issuers and acquirers to see if we can do something that’s offline. These are very early discussions. There’s still no concrete solution. But it’s really one of those that we want to do because it again supports the national agenda of the government for financial inclusion.”

There is also the problem of digital fraud. Navarro said that over the last five years, Visa as a whole has invested close to $10 billion in terms of improving its fraud, risk, and identity and cybersecurity solutions. That includes having three dedicated cybersecurity centers that monitors transactions 24/7. Visa, along with other financial institutions, have also turned to artificial intelligence in the fight against fraud. (READ: EXPLAINER: What is digital fraud and how do you protect yourself from scams?)

“This has translated to roughly a prevention of $27 – $28 billion in terms of fraud,” Navarro said. “Whatever solutions that we’re implementing [elsewhere] is also the same platform that’s implemented in the Philippines.” – Rappler.com

Practical tips to keep yourself safe from bank fraud

While it might seem like a tall order to transform from a cash-dominant society to a digital savvy one by 2030, there are already signs of the cashless wave growing. In 2023, 43% of Filipinos said they carried less cash in their wallet now than they did a year ago, according to the findings of the Visa Consumer Payment Attitudes Study 2024.

In fact, the percentage of Filipinos who use cash as a payment method has already dropped significantly from the previous year, now down to 87% in 2024 from 96% in 2023.

As cash began to decline in popularity, other modern payment methods rose in its place. In 2023, many Filipinos (87%) used mobile wallets as cash when it came to payment options, with 70% of Filipinos surveyed saying they used cards.

“In the past, it’s always been cash that’s been very dominant in terms of usage. Pero (But) now, what we’re seeing is mobile payments have already matched the level of cash and also on the card side,” said Jeff Navarro, Visa country manager in the Philippines.

Generally, it was the younger age group and affluent segment that was driving the push for a cashless society, with 87% of Gen Zs attempting to go cashless in 2023, along with 86% of those in the Gen Y and affluent groups.

What’s driving the change?

In the Philippines, it’s the rise of mobile wallets – and not more traditional financial products, like cards – leading the shift away from cash.

The use of mobile wallets has already become behavioral as four out of five Filipinos said they paid using their mobile wallet every week, while 34% said they prefer using a mobile wallet “out of habit.”

Meanwhile, 37% of Filipinos said that they are now more comfortable using their mobile wallets to pay for bigger purchases.

“In the past, it used to be on small ticket items, the cheaper ones. But now, because they use it more frequently, and they’re more confident in cashless, even higher ticket items, they’re already comfortable using mobile wallets. And for them, because it doesn’t have any cost – there are no fees – it becomes very convenient,” Navarro said on Thursday, February 29.

The study showed that 34% of Filipinos said having no fees for usage drove them to use mobile wallets. However, some mobile wallets and banks have begun to raise their fees for loading or transferring funds to their wallet. For instance, GCash added a P5-convenience fee for every cash-in transaction for linked BPI and UnionBank accounts in October 2023, while those loading their GCash wallet through the BPI add will also have to pay a P10 fee starting March 1, 2024.

But how confident are Filipinos in going cashless? Most believe that they can go at least a week without paying using physical coins and bills. According to the survey, 82% believe they can go cashless for a day, 68% for three days, and 52% for a week. Among consumers who actually tried to go cashless, the average number of days that they successfully managed not to use cash was 10 days.

That confidence comes from a growing acceptance of cashless forms of payment in the market. The study found that according to 87% of Filipinos, they have seen an increase in acceptance points for mobile wallets, while 63% said the same for card swipes and inserts, and 52% for contactless cards.

Here are the merchant categories where Filipinos saw the most increase in acceptance of cashless payments:

• Supermarket (88%)
• Food & dining (86%)
• Bill payments (82%)
• Retail shopping (80%)
• Convenience stores (75%)

EXPLAINER: What is digital fraud and how do you protect yourself from scams?

– Rappler.com

Yes. Cross-border services or International Service Provision is a service-based company which operates in various countries, providing services to clients where the source of income is determined by the location of where the services are performed.

For the other similar services, as long as the services that follow the same concept of being provided, processed, or performed overseas and then utilized, applied, executed, or consumed within the Philippines, this is still considered as international service provision.

I manage a domestic corporation in the Philippines that makes income payments on classified  cross-border services to foreign companies. What is the tax implication of those transactions in the Philippines? 

Per RMC 5-2024, cross border transactions are subject to 25% Final Withholding Tax and 12% Final Withholding VAT. As the services are conducted or paid abroad but there are activities essential to be performed in the Philippines and the said services are utilized, applied, executed, or consumed within the Philippines, they shall be subject to the said taxes.

If a non-resident foreign corporation charges a reimbursable or allocable expense to a domestic corporation, what is the treatment of reimbursements or allocation of expense for cross border transactions? 

The reimbursable or allocable expense charged by the foreign corporation in the Philippines should contribute to the value or benefit since it is an additional payment made by the domestic corporation. Thus, the said charge to the domestic corporation reduces the foreign corporation’s expenses and shall be considered as a financial gain for the foreign corporation.

The 2024 International Tax and Investment Conference successfully concluded on February 27, 2024, at the Sheraton Manila Hotel. The International Tax and Investment Roadshow (ITIR) is scheduled to commence in March 2024. This initiative aims to promote investment and business activities in the Philippines across 15 states and countries through a series of events, starting with the East Asia Cluster. Visit www.acg.ph for more information. 

If you have other tax issues or concerns, consult us.

– Rappler.com

Finance Secretary Ralph Recto is urging Filipinos to invest in the 30th tranche of the Bureau of the Treasury’s Retail Treasury Bonds (RTB 30) in a bid to promote cheap investment opportunities and help the government fund its priority projects.

“The RTB 30 is more than just a financial contract but a commitment to shared prosperity. It will help drive the government’s socioeconomic agenda forward and empower ordinary Filipinos to chart their path to financial freedom for a more secure future,” Recto said.

RTB 30 is a five-year tenor investment with a gross interest rate of 6.25% per annum, payable every quarter until its maturity in 2029.

The public offering for RTB 30 will begin on February 13, 2024 until February 23, 2024, and will be settled on February 28, 2024. The public can avail of the investment with a minimum amount of
P5,000, and in multiples of P5,000 thereafter, during the offer period.

RTBs can be purchased via BTr’s online ordering facility for investors who are clients of China Banking Corporation, the Development Bank of the Philippines, Land Bank of the Philippines, and the First Metro Securities. 

Filipinos can also avail of the investment instrument through the Bonds.PH app.

The RTB 30 also offers an exchange program, which allows investors to reinvest their funds and mitigate reinvestment risk upon maturity of the eligible bonds. Eligible participants for the exchange are existing holders of RTB 22 and 25. 

“RTBs are just a few swipes away, making investing as easy as ordering our favorite food delivery,” Recto said. – Rappler.com

Yes. The Ease of Paying Taxes (EOPT) law has classified taxpayers into micro, small, medium, and large taxpayers, to wit:

Under the EOPT, your business is classified as “micro.” Consequently, it grants certain benefits to taxpayers classified under the “micro” and “small” group, such as reducing the number of pages from 4 to 2 pages, and reducing the rate of civil penalties. Further, surcharge penalty was reduced from 25% to 10%, interest penalty was reduced from 12% to 6%, the penalty for failure to file certain information returns is now only P500, and the compromise penalty rate of 50% for violation of invoicing requirements.

I am a foreigner with interest in investing in the Philippines. I’ve heard that the EOPT Law has made paying taxes easier. Is this true?

Yes. Under the EOPT Law, taxpayers can file their tax returns online or manually to the Bureau of Internal Revenue (BIR) or an authorized agent bank anywhere in the country without penalty.  An authorized tax software provider may also be used for more convenience.

I am a VAT-registered taxpayer, and I find VAT compliance very confusing. Are there any improvements under the EOPT Law?

Yes. There are at least three features under EOPT Law that streamlined VAT rules:

First, a sales invoice is now sufficient for both the sales of goods and the sale of services. Previously, sales invoices were used for sales of goods, while official receipts were used for sales of services.

Second, the EOPT law has allowed output VAT credit on uncollected receivables. If a seller of goods or services has not collected payment for a sale, they can deduct the output VAT related to those uncollected receivables from their next quarter’s output VAT, provided they have already paid the VAT on that transaction.

Third, VAT refund is now risk-based. VAT refund claims will be classified into low risk, medium risk, and high risk based on the amount of VAT refund claim, tax compliance history and frequency of filing VAT refund claims. The BIR must also act on these claims within 90 days, but medium and high risk claims are still subject to audit and other verification processes.

Further, the taxpayers are given a transitory period to adopt the changes in the value added tax within six months from the effectivity of the implementing rules and regulations.

Here are the other features of EOPT Law:

• The requirement to pay an annual registration fee of P500 has been removed
• The period for keeping records of books of accounts has been shortened from 10 years to 5 years
• The threshold for issuing an invoice has been raised from P100 to P500
• The BIR will be adopting digitalization measures
• An online facility to be provided for non-resident taxpayers

To discuss more about the EOPT and other new laws and regulations to improve ease of doing business in the country, the Asian Consulting Group (ACG) is organizing the 2024 International Tax and Investment Conference on February 27 at Sheraton Manila Hotel in partnership with international organizations such as the World Bank, International Tax and Investment Center (ITIC) based in Washington DC, and the Organization for Economic Cooperation and Development (OECD).

Visit www.acg.ph for more information. Avail of the early bird discount. Register here!

– Rappler.com

No. As clarified by Revenue Memorandum Circular (RMC) No. 8-2024, online sellers or merchants are required to register and pay their taxes. However, it is the e-marketplace operators and/or the digital financial service providers (DFSPs) which are required to withhold the 1% tax on gross remittances, and thereafter remit the same to the BIR.

When will this take effect, and until when can they comply before they start withholding tax?

Revenue Regulations (RR) No. 16-2023 will take effect on January 11, 2024, as clarified by RMC No. 8-2024. However, e-marketplace operators and DFSPs, including online sellers and merchants, will have a 90-day transitory period from the issuance of RMC No. 8-2024 within which to comply with the policies and requirements of other government agencies, if any, and to give them an opportunity to adjust and comply with the provisions of RR No. 16-2023.

I started selling clothes online during the pandemic. I don’t really make a lot of money but it helps pay my rent and other bills. What do I need to do as an online seller under RR No. 16-2023 so I don’t get into trouble with the BIR? Is there any exemption for small online sellers like me who barely make any profit? How do I avail or apply for it?

As an online seller, you are required to register your business with the BIR and to submit a copy of the BIR-issued Certificate of Registration (COR) as part of the documentary requirements by e-marketplace operators prior to the use of their facility.

If you are exempt from income tax or subject to a lower income tax rate pursuant to any existing law or treaty, submit a duly issued certification to the e-marketplace operator as proof of your exemption or entitlement to a lower rate pursuant to Section 2 of RR No. 16-2023.

In addition, you may also provide a Sworn Declaration (SD) duly received by the BIR if it is determined and/or expected that the gross remittance received from the e-marketplace operators or DFSPs will not exceed the threshold of P500,000. This declaration is to be submitted on or before January 20 of each taxable year.

In the event of failure to submit the SD, regardless of the actual total income or gross remittance, the e-marketplace operator or DFSP will automatically deduct the withholding tax.

If the gross remittances exceed the P500,000 threshold at any time during the taxable year, the BIR-prescribed SD must be submitted to the e-marketplace operators or DFSP to initiate the withholding tax on gross remittance.

In a nutshell, what are the obligations of an e-marketplace operator under this new regulation? Are there any opportunities to discuss our concerns with the BIR since it seems quite abrupt and may be disrupted in our operations since a lot of online sellers are not yet registered?

An e-marketplace operator is required to observe the following:

1. Ensure that the sellers/merchants applied BIR Form No. 2303 or Certificate of Registration
2. Require sellers/merchants to submit necessary certification as proof of entitlement to exemption or subject to a lower income tax rate
3. Requires sellers/merchant to Submit a copy of the BIR-received Sworn Declaration, if Seller/Merchant failed to submit SD, regardless of actual amount the withholding tax shall be deducted.
4. Monitor the gross payments of buyers/customers and deduct the withholding tax before remittance to the concerned sellers/merchants
5. Provide sellers/merchants Certificate of Creditable Tax Withheld at Source or BIR Form No. 2307 within the prescribed under the tax code or upon request by the seller/merchants.

The Asian Consulting Group (ACG) is organizing a series of dialogues to address tax complexities with a fair and coordinated approach. If you are a stakeholder in the government or private sectors, you may join the dialogue using the link or QR code here. 

This is part of the International Tax and Investment Conference happening on February 27, 2024 in partnership with international organizations such as the World Bank, International Tax and Investment Center (ITIC) based in Washington DC, and OECD. Visit www.acg.ph for more information or register here to attend the conference.

If you have other tax issues or concerns, consult through this link.

– Rappler.com

The key distinction lies in the type of taxes being audited. If a taxpayer is subject to a regular audit, it means that the examination of books of accounts and other accounting records includes All internal revenue taxes. In the case of a VAT audit, the Bureau of Internal Revenue (BIR) will only audit VAT compliance for a specific period, typically less than one year.

Yes. There is a possibility of receiving two Letters of Authority (LOAs) for both regular audit and VAT audit in the same year. However, it’s crucial to note that the subsequent LOA should not include the tax type that is already under audit by the BIR. This means that if there’s already a VAT audit, the regular audit for the same taxable year will no longer include VAT in their assessment. 

What are the common issues that need to take note when receiving an LOA for an all taxes or VAT audit?

When receiving a Letter of Authority, it is essential to consider the types of taxes being audited by the BIR, the specific taxable period, the jurisdiction of the Revenue District Office, and the authorized person scrutinizing the accounting records. This awareness helps taxpayers understand which documents to present based on the provided checklist. If an LOA is issued to your office, you should ensure a timely response by presenting the books and other accounting records to their office. Once an assessment is issued, ensure that the protest is submitted on time. 

If an “All Taxes Audit” is issued, you should ensure that the books of accounts and accounting records are accurate and timely declared in the tax returns filed, and that expenses are properly substantiated. Additionally, taxpayers required to withhold tax should also make sure that the tax withheld is properly remitted monthly and quarterly.

For the VAT audit, the BIR will be auditing a particular period of less than one year. The scrutiny will focus on sales and purchases. To prepare for this, make sure that your sales declaration is timely declared and properly classified as VATable Sales, VAT exempt sales, and zero-rated Sales. If you are claiming VAT exemptions or VAT zero-rating, you need to be able to present the special requirements.

For purchase transactions, you should verify if the input VAT claimed on the VAT return is properly supported with invoices. If you have importations, secure the importation documents from the Bureau of Customs.

In addition to filing VAT returns, taxpayers are also required to comply with the quarterly Summary List of Sales and Importations. This list can be used by the tax authority in assessing your taxes based on third-party information. You should ensure that all the declarations mentioned above are properly reported in these attachments.

Do you need clarifications on Regular and VAT audit?  ACG provides a free consultation, type down any tax concerns on the live chat feature on the website. Visit acg.ph, and let us assist you in resolving any tax cases and BIR audits.

– Rappler.com

You have to learn how to keep your own account safe as well. That’s especially true now as some fraudsters have taken to “hacking” the human instead, as banks ramp up their security and make their systems impervious to hacks.

As cybersecurity consultant Philip Kwa put it, fraudsters take advantage of people being the “weakest link” in the chain of security. They can exploit our human tendencies to give out information or click risky links when we’re excited, afraid, or vulnerable.

“As we know, the human factor is the weakest link,” Kwa told Rappler. “Have this security culture in your mind to always keep yourself safe. Look very carefully at what is being sent to you.”

So, if fraudsters are increasingly targeting us account holders directly, what actions can we then take to protect ourselves? We spoke to cybersecurity experts and a bank president to find out what tips they can offer.

1. Got a link? Type it, don’t click it.

One classic trick that fraudsters use to get into your account is to phish for your information using a URL that looks almost identical to that of a real website – but with some letters that are actually different. This is called a “homoglyph” attack.

Quick test: can you tell which one is the actual URL to the central bank’s website?

• bsρ.gov.ph
• bSp.goⅴ.ph
• bsp.gov.pʜ

Trick question, it’s none of them! The real URL should be bsp.gov.ph. If you’re not extra careful, you could easily click one of these links.

So, what happens if you actually click a phishing link? You might be redirected to a website that “spoofs” or copies the website of your bank down to the last detail. Convinced, you might then enter your username and password in the fake website, thinking that you were logging into your bank account, when in reality, you just gave the fraudster your account details.

Fortunately, modern browsers provide you some protection against homoglyph attacks, so long as they are updated. But UnionBank chief information security officer and data protection officer Joey Rufo recommended going a step further: type the URL, don’t click it.

“Just be cautious of what you click. Type it, don’t click it. Sometimes, even if you click on the text that you see on the message, it may not be the actual link to where it goes, right?” Rufo told Rappler. “The best way is always to just go directly to the browser, and type the actual website.”

2. Keep a low profile and always double-check

In this age of social media, Rufo recommended going the opposite route: don’t overshare. Posting on social media, especially when the visibility of your post is set to public, gives would-be scammers free access to your information. That could make you an easier target to impersonate.

Rufo likened it to displaying your valuables in the physical world.

“You try to keep things simple and hidden. So, in the cyber world, same thing. Do not share more than what is necessary. Do not share your boarding passes, tickets, passports, your 2×2 picture. Do not put it anymore online,” Rufo told Rappler in a mix of English and Filipino.

But with us being chronically online, the chief information security officer said that the best way to protect yourself is to assume that your information is already on the web.

That’s why cybersecurity expert Philip Kwa recommended double-checking whenever you get suspicious or unexpected messages from people.

“If you receive an email that you’re suspicious of, that you don’t expect to receive, then don’t answer the email. Or if it comes from a friend of yours, and you don’t expect a friend to send it to you, call your friends and check with your friends,” he told Rappler.

Double-checking has become even more important as artificial intelligence (AI) enables bad actors to spread phishing emails and messages at an unprecedented pace and scale. (READ: AI being used for hacking and disinfo, top Canadian cyber official says) 

“With the use of generative AI, I can use it to craft a very enticing email. I can use it to emulate your voice, and you think it’s your friends or relatives. So again, if you receive this kind of call, double-check and make sure that it’s from somebody that you can trust,” Kwa added.

3. Don’t put your savings in a single account

You may have heard of not putting all of your money in an e-wallet. But the same applies to your savings too. 

Similar to an e-wallet, it can help to only put large amounts in your deposit account when you immediately need it, especially if the account has online banking functionality.

That’s because if a fraudster manages to gain access to your bank account, they can transfer up to P50,000 out a day in real-time using InstaPay. If it goes unnoticed for weeks, that could mean hundreds of thousands siphoned off.

Richard Lo, convenor of anti-fraud advocacy group BankFraudPH, instead recommended keeping the bulk of your savings in stable financial instruments, like time deposits or money market unit investment trust funds.

This gives a couple of benefits, such as earning higher returns than a regular savings account while also taking low risks, given their conservative nature. 

When it comes to security, sometimes slower is better too. It’s harder for a fraudster to impersonate you and withdraw money when they’re stored in these financial instruments, especially since it takes about one full day for the bank to process withdrawals from these instruments.

“Perpetrators cannot readily touch your money which are placed in such ‘vaulted’ investment instruments,” Lo told Rappler.

4. Lower your transaction limits, add MFA

You should also familiarize yourself with the security features in your banking app. For instance, if you have a savings account that has online banking, you might want to manually lower transaction limits.

Most mobile apps for online banking include settings to reduce the total amount that you can transfer per transaction. Jerry Ngo, chief executive officer of EastWest Bank, advised that if you don’t regularly transfer large amounts of money using online banking, you can lower this limit and raise it the next time you need it.

“I keep my limits very low. Whenever I want to just transact, I go to settings, I increase it, again may mga (there is) extra validation. Then I make those big transactions. Then you can reverse it back,” he said. “Safe, kontrolado mo lahat (you control everything).”

Because banks normally ask for further OTP verification before these settings can be tweaked, it affords you a bit of extra protection.

UnionBank’s Rufo also recommended enabling multi-factor authentication, or MFA, whenever you can – for your bank account and even social media accounts. This means that aside from having to enter a password to unlock your account, you’ll also be asked for another form of verification, such as an OTP or face scan.

Rufo suggested strengthening your bank account’s password too and using a password manager to help remember it.

“If you have the ability to use password managers, such as those digital ones, make use of them. It allows you to have different passwords for different websites,” he told Rappler. 

“A lot of the hacks na nakikita namin, isa lang ‘yung password niya sa email, sa banking, sa social media. So, one password, pasok sa lahat,” he said.

(A lot of the hacks that we see, the person just had one password for their email, banking, and social media. So, with one password, the hacker got into everything.)

5. Beware of info-stealing malware

Sometimes, you might be giving your information to fraudsters without even realizing it. That can happen when your device is infected with an “info stealer.”

An info stealer is a type of malware that can stay on your computer or phone without you knowing it. Once in your device, it can steal credentials and passwords that you type in through a variety of ways.

But how do you get infected by an info stealer? It can happen when you click on links that redirect you to malicious websites. Rufo also warned that they can hide in seemingly innocuous apps – like ones that you download to check horoscopes or “clean” your phone.

“What it does is that whenever you receive a communication, it also sends the communication to the cyber criminals,” Rufo told Rappler. 

“That’s why we keep on educating people to always have antivirus on your computers. Don’t use pirated software. Don’t download apps that you don’t know or are non-reputable,” the chief information officer added. – Rappler.com

The BIR has issued RR 16-2023 to provide for the rules on the tax for gross remittances by online sellers or merchants. Specifically, there is now a withholding tax of 1% imposed on half of the gross remittances by electronic-marketplace operators and Digital Service Providers to the online merchants for the goods or services sold through their facility. 

This is not yet the digital tax. This withholding tax is in effect an advanced collection of the income tax due from the sellers/merchants. Upon filing and payment of income tax, the seller/merchant will apply the withheld amount as tax credit or deduction from its tax due.

Gross remittance, for purposes of this withholding tax, refers to the total amount received by an e-marketplace operator or digital financial service provider from a buyer/consumer through their platform/facility. However, gross remittances does not include:

1. Sales returns and discounts; separately billed delivery or shipping fee; and value added tax, collected by the e-marketplace operator from the online consumer and subsequently remitted to the online seller; and 
2. Consideration for the use of the e-marketplace and/or digital financial services platform.

In this case, the e-marketplace operator or digital service provider is the one who is required to deduct and withhold tax on the gross remittances in case the payment of sales of goods and services is made in their online platform before sending the remittances to the sellers/merchants.

I have a sole-proprietorship business which involves online selling. Will I be subject to the 1% withholding tax? What if I apply for BMBE certification?

Yes, but only on your online sales transactions since the e-marketplace operators or digital service providers are mandated to withhold 1% on ½ of their gross remittances to you. However, you are exempt from the withholding tax under the following circumstances:

1. If the  annual total gross remittances to you (an online merchant) for the past taxable year has not exceeded P500,000.00; or
2. If the cumulative gross remittance to you (an online merchant) in a taxable year has not exceeded P500,000.00; or
3. If the seller/merchant is duly exempt from or subject to a lower income tax rate pursuant to any existing law or treaty (e.g., income tax exemption under the Barangay Micro Business Enterprise or BMBE law). Provided that, the concerned seller/merchant is able to secure the necessary certification, clearance,ruling, or any other document serving as proof of entitlement to the said exemption or lower income tax rate. The said proof of entitlement shall be submitted by the seller/merchant to the e-marketplace operator or digital financial services provider concerned.

As mentioned above, if you have applied and secured a BMBE certification, then you will be exempted from the withholding tax. 

I am an ordinary consumer who is using an online platform or an e-wallet. If I transfer cash to my nephews just because I want to, will I be subject to 1% withholding tax?

No. Ordinary remittance other than from sales or income payment will not be subject to withholding tax. The regulation refers to gross remittances from e-marketplace operators or digital service providers to their sellers/merchants. And the account used should be a BIR registered trade name of the seller or merchant, not a personal account. 

As an online seller/merchant, what are the things that I need to take into consideration in complying with the Bureau of Internal Revenue?

In compliance with Section 236 of the NIRC of 1997, you have to register your business with the BIR.

As provided under RR 16-2023, e-marketplace operators shall require from their respective sellers/merchants the submission of their Certificate of Registration (COR) or BIR form 2303, and include the same as part of e-marketplace operators’ minimum seller/merchant accreditation requirements.

Aside from being registered with the BIR, it is imperative also for businesses to maintain a books of accounts and keep records, file and pay taxes on time, issuance of invoices receipts, and to comply with the other requirements that are applicable to your business.

Also, a merchant/seller must know that any transactions made within the Philippines are subject to Income Tax and Value Added Tax, unless otherwise exempted.

In a recent interview with the Philippine Tax Whiz, he mentioned that RR No. 16-2023 is simply expanding the scope of the withholding tax system and there’s a need to ensure that our regulators, the BIR, are listening and will be coming up with new measures to at least ease the burden, especially the small ones. Watch the clip here. #AskTheTaxWhiz – Rappler.com

You can undertake an annual tax review (ATR) in order to assess your tax compliance. 

The ATR is a proactive measure aimed at preparing for an annual tax audit. It involves reviewing the tax compliance of the taxpayer vis-a-vis the BIR requirements. It will determine any possible tax exposure and its corresponding penalties. On top of verifying the timely filing and submission of tax returns and their attachments, along with prompt payment of taxes due, it will also match the sales and expense declaration from various returns and  reports to assess any underdeclaration or overdeclaration, respectively.

Consequently, ATR facilitates the resolution of tax issues even before the start of a BIR audit thus, reducing potential risks of having a huge deficiency tax assessment.

Will reviewing all documents and checklists prevent us from being audited by the BIR?

No. All taxpayers are possible candidates for audit. But it will help companies prepare for an annual tax audit and investigation of the BIR. As provided under Revenue Memorandum Order Nos. 6-2023 and 8-2023, there are certain types of transactions that are subject to Mandatory and Priority Audit:

1. Mandatory cases

These are transactions to which an audit is required as a condition precedent for the issuance of tax clearance, processing of claims for tax credit/refund and other cases that may be identified by the Commissioner of Internal Revenue as priority targets for audit/investigation. The following shall be covered by this type of Audit:

To be covered by eLAs:

• Claims for tax refund  of Excise Tax; or Income Tax (except income tax claims of Job Personnel), including final and creditable income tax withheld
• Request for Tax clearance whose gross sales or receipts  for the immediately preceding taxable year exceeds P3 million or whose gross assets upon retirement exceeds P8 million
• Cases returned to the investigating offices where the original Group Supervisor (GS)/Revenue Officer (RO) who conducted the audit are no longer available due to transfer of work assignment or separation from service
• Cases referred by other IO due to the taxpayer’s transfer of business registration  where the taxpayer agreed to have the audit continued by the new IO, provided the covered period is not yet prescribing
• One -Time Transactions (ONETT) whose cases resulted to a deficiency tax or Real Property Transactions with findings in the Electronic Certificate Authorizing Registration (eCAR) system
• Cases with validated discrepancy notices
• Policy cases/industry issues under the directive of the commissioner

To be covered by TVNs:

• Persons requesting for tax clearance whose gross sales for the immediately Request for Tax clearance whose gross sales or receipts  for the immediately preceding taxable year is P1 Million but not exceeding  P3 million or whose total assets upon retirement is P3 million but not exceeding P8 million
• Claims for value-added tax (VAT) refund
• Income tax refund of job order personnel
• Claims for refund/tax credit arising from erroneous payment of taxes, including double payment of taxes due to system error/glitch

2. Priority Cases

• Cases which have been electronically selected by the IRIS -Audit module based on the prescribed criteria pursuant to identified  risk that need immediate action.
• Audit cases that shall be handled  by the VAT Audit Section (VATAS) and Office Audit Section  of the Assessment Division (AD), and  Large Taxpayers VAT Audit Unit (LTVAU)
• Cases manually selected by the regional director/ACIR LTS  but this has to be approved by the CIR

What are the things that we need to take note of in our year-end tax compliance?

Taxpayers should remain vigilant about the impending deadlines in 2024. Below are the year-end requirements they must fulfill to comply with the Bureau of Internal Revenue (BIR):

Aside from compliance with the BIR requirements, businesses also need to secure their barangay clearance as well as their business or mayor’s permit. Generally, the deadline for the renewal of business permits is on January 20.

Do you need assistance on your annual tax compliance? ACG conducts a comprehensive review of your tax requirements and assesses possible tax exposures. Through an annual tax review, we help you fix your tax issues even before the beginning of a BIR audit. For free consultation, visit acg.ph.

– Rappler.com