Entrepreneurs both traditional and online should take note that the Bureau of Internal Revenue (BIR) has just released a new regulation on the mandatory registration of persons engaged in business, detailing the guidelines for registration and the penalties for non-registration.
Revenue Regulations (RR) No. 015-2024 issued last August 15 lays down the guidelines, procedures, and requirements for implementing the mandatory registration of persons engaged in business, including brick-and-mortar stores and online trade or business pursuant to Section 236(A) of the Tax Code and Republic Act No. 11967, otherwise known as the Internet Transactions Act of 2023.
RR 015-2024 covers persons who are engaged in the following trade or business in the Philippines:
• Sale and/or lease of goods and services through brick-and-mortar stores
• E-commerce or online businesses, whether formal or informal
• Operation of digital platforms, including e-marketplace platforms
• Sale and/or lease of goods and services through digital platforms
• Digital content creation and streaming that are income generating
• E-retailing of goods and services
• Sale of creative or professional services, on-demand or freelance services or digital services supplied over the internet
• Other forms of businesses other than those mentioned above which are conducted online
The RR states that all persons covered shall register with the BIR and that “failure to register shall be subject to administrative penalties and criminal liabilities.”
A person engaged in the sale and/or lease of goods and services through brick-and-mortar stores shall register his or her head office at the BIR district office having jurisdiction over the place of business address.
A person operating, maintaining or setting up an online presence on an online store for its brick and mortar store shall register its store name with the BIR as an additional “business name” attached to the head office or branch.
A person engaged in the sale and/or lease of goods and services through website, webpage, page, platform or application who does not have a brick-and-mortar store shall register at the BIR district office having jurisdiction over the place of residence for individuals or principal place of business registered with the Securities and Exchange Commission for juridical entities.
All registered persons shall post or exhibit their original Certificate of Registration (COR)/Electronic Certificate of Registration (eCOR) at the place of the business and at each branch and/or facility clearly and easily visible to the public.
All covered persons operating a business through a website, social media or any digital or electronic means shall display conspicuously the electronic copy of the BIR COR/eCOR on their website, webpage, account, page, platform or application.
Should any covered person engaged in business fail to register, the Commissioner of Internal Revenue or duly authorized representative “has the authority to issue a Closure/Take Down Order to close the business operations,” RR 015-2024 warns. The BIR may also file appropriate charges under the Run After Tax Evaders Program of the BIR.
The closure/take down order shall not be less than five days and shall be lifted only upon compliance with registration and other requirements, and the BIR has validated that the violations have been rectified, the RR further states.
The order likewise informs lessors and digital platforms including e-marketplace platforms of their responsibility and accountability in ensuring that all their respective lessees and online sellers or merchants are registered with the BIR and are compliant with invoicing requirements.
“Failure to enact, or strictly enforce internal mechanisms or rules to prohibit lessees and online sellers or merchants without the required BIR COR/eCOR from further selling, posting, listing or offering goods and/or services in their respective Brick-and-Mortal Stores, website, webpage, account, application, and digital platforms, including e-marketplaces, shall be construed as an act of aiding and abetting in the commission of the offense,” the regulation declares.
The penalties awaiting persons found violating the registration requirement include P1,000 for late registration; P1,000 per business name or store name for failing to register the store name or business name; and P1,000 for every violation/per business name or store name for failing to post COR/eCOR on the place of business or website, platform or application.
For lessors, digital platforms, and e-marketplaces, the penalty for allowing lessees or online sellers/merchants to use the premises or digital platform to engage in business without BIR registration is P20,000 for each branch/store/establishment.
Meanwhile failure to obey or refusal to comply with the closure/take down order will be slapped P20,000 in penalty.
There are also penalties for taxpayers that fail to register their head office or branch if the business or self-employment is discovered through various means including during a tax compliance verification drive, ocular inspection or mission order, upon BIR notification to register, or through third-party reports. The penalties are P20,000 for medium and large taxpayers; P15,000 for small taxpayers; P5,000 for micro taxpayers; and 50,000 for businesses subject to excise tax.
RR 015-2024 will take effect 15 days after publication in the Official Gazette, BIR’s official website, or in any newspaper of general circulation.
