Selling online in the Philippines: when the BIR gets involved
If you sell through Shopee, Lazada, Facebook, or TikTok Shop, the BIR considers you a business. Here is what that means for your taxes.
You are already running a business
Whether you list items on Shopee, take orders through Facebook, or ship products from your bedroom, the BIR (Bureau of Internal Revenue) treats you the same as any other business owner. The trigger is simple: regular activity with the intent to earn. A one-time garage sale is different from a shop you restock every week. If you are restocking and reselling on a regular basis, you are doing business in the eyes of the BIR.
This does not mean the government is targeting small sellers. It means the same rules that apply to a sari-sari store owner or a freelance graphic designer also apply to you.
Registration comes first
Before you can comply with anything else, you need a BIR Certificate of Registration (COR). This document officially records you as a taxpayer engaged in business.
To get one, you need a TIN (Taxpayer Identification Number). If you already have one from a previous job, you use the same TIN. You then go to the Revenue District Office (RDO) that has jurisdiction over your home or business address, file the required registration form, and pay the annual registration fee.
Once registered, you also need to register your official receipts or sales invoices. You cannot legally issue receipts to buyers before completing this step. Think of the COR and your registered receipts as a pair: you need both before you can operate above board.
What taxes apply to online sellers
Once registered, you typically deal with two categories of tax.
Income tax is the tax on what you earn after your costs. If you are a sole proprietor or self-employed individual, you file income tax returns on a quarterly and annual basis. The BIR gives self-employed people a choice between two computation methods, and the better choice depends on your actual figures.
Percentage tax or VAT is a separate, sales-level tax. If your annual sales fall below the threshold the BIR sets, you are under percentage tax and file monthly. If your sales cross that threshold, you register for VAT instead and follow a different filing schedule. Sellers who choose the 8% flat rate option for income tax may be exempt from percentage tax, which is one of the reasons that choice matters beyond just the income tax rate.
Receipts and records
Going from casual seller to registered business means new paperwork. You need to issue a receipt or invoice for every sale. You need to keep records of all your transactions, and most small businesses do this through registered books of accounts. You also need to display your Certificate of Registration at your place of business, even if that place is your bedroom.
This might feel like a lot, but the BIR does audit online businesses. Sellers who have been earning for years without registering sometimes get flagged, and catching up on unregistered years is far more difficult than starting clean from day one.
What if you started selling before you registered
It happens often. Many sellers start thinking it is just a hobby, then realize a year or two later that they have built something real. The BIR allows late registration, but there are consequences for the period you were earning without being registered. Those consequences grow the longer you wait.
If you are in this situation, the best move is to get your records together and register now. Voluntary compliance is treated more favorably than being discovered during an audit.
Have questions about which forms to file, which tax rate fits your setup, or when your next deadline falls? Ask AskOnward. It draws on the official BIR rules to walk you through your specific situation, whether you sell on one platform or several.
This article is for general information and is not affiliated with the government. For official forms and the latest rules, see the Bureau of Internal Revenue at bir.gov.ph.