THE Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular (RMC) 60-2020 on June 10, 2020 to ensure that all persons doing business and earning income in any manner or form, specifically those who are into digital transactions, are registered based on the provisions of Section 236 of the Tax Code and compliant with current tax laws.
Newly registered entities should comply with the provisions on the Tax Code and other applicable tax issuances, particularly on the following matters:
1. Issuing receipts or invoices;
2. Keeping registered Books of Accounts;
3. Filing and paying due taxes on time.
Businesses are encouraged to register no later than July 31, 2020 to avoid the imposition of penalties. They are also encouraged to declare voluntarily their past transactions, which are subject to pertinent taxes, and pay the corresponding taxes due. If they declare and pay on or before July 31, 2020, such taxpayers will not be penalized.
The aim of this BIR directive is to legitimize businesses and protect the consumers, and does not mean they have to pay taxes. According to Republic Act 10963 (Tax Reform for Acceleration and Inclusion Law), net taxable income below P250,000 is not subject to income tax. Self-employed individuals have the option to pay eight percent income tax on gross sales in excess of P250,000. They may also opt to pay income taxes based on graduated tax rates if their gross sales exceed the threshold of P3,000,000.
Online sellers and freelancers who are found to be doing business without registering shall be imposed with the applicable penalties under the law and under the BIR’s rules and regulations.
Source: P&A Grant Thornton
Certified Public Accountants
As published in SunStar Cebu, dated 18 June 2020