I sell on Shopee, Lazada or Facebook Marketplace from home. Do I really need to register with the BIR and pay taxes as an online seller?

Why

There is no separate tax code for online sellers. Section 236(A) of the National Internal Revenue Code, as amended by the Ease of Paying Taxes Act (Republic Act No. 11976), requires every person subject to an internal revenue tax to register once, electronically or manually, on or before the commencement of business. A person who buys stock or makes products and sells them repeatedly for profit through Shopee, Lazada, TikTok Shop or a Facebook page is engaged in business just as a store owner is. The Internet Transactions Act of 2023 (Republic Act No. 11967) reflects the same policy: Section 6 says those who engage in e-commerce should get no more favourable, and no less favourable, treatment than offline businesses.

There is a real difference between running a business and occasionally selling your own things. The Internet Transactions Act does not cover consumer-to-consumer transactions, which it defines in Section 4(c) as transactions between end-users for personal, family or household purposes and not in the ordinary course of business (Section 3). Clearing out your old clothes or selling a used phone once is not a trade. Buying items to resell, taking orders for products you make, or selling as a steady side hustle is.

For income tax, a self-employed individual whose gross sales do not exceed the VAT threshold may choose, under Section 24(A)(2)(b) of the Tax Code as amended by the TRAIN Law (Republic Act No. 10963), an 8% tax on gross sales and other non-operating income in excess of ₱250,000, in place of both the graduated income tax rates and the percentage tax. If you do not choose the 8% option, you pay graduated income tax on your net taxable income (0% on the first ₱250,000 under the schedule effective 2023) plus a 3% percentage tax on gross quarterly sales under Section 116. The VAT threshold under Section 109(CC) is ₱3,000,000 in gross annual sales; it is adjusted every three years using the consumer price index, so check the current figure. If your sales go over it, you must register for VAT (Section 236(F)).

You also have to issue invoices. Under Section 237, as amended by the EOPT Act, a non-VAT seller must issue a registered sale or commercial invoice for each sale of ₱500 or more, may issue one end-of-day invoice for smaller sales once they add up to ₱500, and must issue one whenever the buyer asks. Separately, Section 23(h) of the Internet Transactions Act requires e-retailers and online merchants to issue paper or electronic invoices or receipts for all sales, and Section 23(a) requires them to state prices in line with Article 81 of the Consumer Act.

Platforms will ask for your details. Section 21(b) of the Internet Transactions Act requires e-marketplaces to collect, as far as practicable, each online merchant's name with a valid government ID or business registration documents, address and contact details before listing them. Section 45 of the EOPT Act gives micro taxpayers (gross sales below ₱3 million) smaller penalties when they slip up: a 10% civil penalty instead of 25%, and 50% lower interest. That helps, but it is still cheaper to register and file from the start than to pay back taxes later.