Registration of online business, the key to consumer protection

The Department of Trade and Industry (DTI) urged online businesses to register with the government, citing it as key to consumer protection. This call comes after the recent directive of the Bureau of Internal Revenue (BIR) for online sellers registering their businesses on or before 31 July 2020.

In BIR Circular No. 60-2020 released on 10 June, the agency notified all persons doing business and earning income in any form, specifically those engaged in an online business, through any use of electronic platforms and media or any digital means, to follow the Tax Code.

“There is greater traceability if online sellers are registered, which increases the trust factor and confidence of the online buyers in making the transaction online. Business registration addresses the element of trust, which is crucial if we are to grow e-commerce in the country,” DTI Secretary Ramon Lopez said.

He added: “In recent past, issues and complaints on online transactions were the headlines. I believe that online businesses’ registration is for the good of the e-commerce industry if we want this sector to grow.”

The trade chief explained that even in the brick-and-mortar business model, the Department has always encouraged businesses to register.

DTI estimated that there are probably more than 6 million micro-entrepreneurs that are not registered– also known as those in the informal sector–and only about 1.5 million micro-entrepreneurs registered.

“We know, however, that eventually, the unregistered business will register as they grow in size because sooner or later, they will have to borrow from formal lending institutions like banks and their audited financial statements will be required. Moreover, if they get to serve larger establishments, official receipts for their sales will be required. Thus they will have to be registered,” Sec. Lopez said.

He added, “This reality is true, for both in the brick and mortar and in the online business. At any rate, the rule applies to those really in business, regularly selling. Even if such activity is small in size, it must be registered. The tax code exempts an annual income below Php250,000 from income tax.”

The trade chief emphasized, however, that those selling intermittently, on an irregular basis or selling homemade stuff as a hobby during this period of the pandemic, are understood as not yet in business. Thus, these are not required to register.

He reiterated, “Business registration has always been the right way of doing business. Registraion helps a business grow. It can also increase buyer’s confidence.”