PRESCRIBING POLICIES AND GUIDELINES IN THE MANDATORY REGISTRATION OF PERSONS ENGAGED IN BUSINESS AND ADMINISTRATIVE SANCTIONS AND CRIMINAL LIABILITIES FOR NON-REGISTRATION

SECTION 1. SCOPE– regulations are hereby promulgated to prescribed guidelines, procedures and requirements for the implementation of mandatory registration of persons engaged in business of National Internal Revenue Code of 1997 in provisions of Section 244 and 245 of the Tax Code.
 
SECTION 2. BACKGROUND- every person subject to any internal revenue shall register once in Bureau of Internal Revenue (BIR), either electronically or manual, of the Tax Code, Section 236(A).
  1. Within ten (10) days from date of employment;
  2. On or before the commencement of business;
  3. Before payment of any tax due; or
  4. Upon filing of a return, statement or declaration as required under the Tax Code.
 
Anyone conducting business or trading in the Philippines without Bureau of Internal Revenue (BIR) registration may be subject to fines and penalties administrative and penal in nature. Furthermore, Section 253(b) of the Tax Code imposes penalties on anybody who knowingly conspires to commit a tax-related criminal or causes the infractions of another.
 
However, just in case of associations, partnership or corporations, the partner, president, general manager, branch manager, treasurer, office-in-charge, and employees, shall be responsible for the penalty in case for the violation.
 
The Philippines released the Internet Transactions Act of 2023 in response to the growing number of online enterprises. To foster trust in e-commerce and safeguard the interests of consumers, it requires those engaged in online trade to abide by local policies, laws and regulations. This includes registering with the BIR, filing accurate tax returns, and paying applicable internal revenue taxes.
 
SECTION 3. COVERAGE. - persons cover natural or juridical, who are engaged in the following trade or business in the Philippines:
  1. Sale and/or lease of goods and services through brick-and-mortar store;
  2. E-commerce refers to the sale, procurement, and utilization of digital goods, digital content/products, financial services, entertainment services, travel services, transport services, delivery services, educational services, social commerce, on-demand labor and repair services and property and space rentals;
  3. Operation of digital platforms, including e-marketplace platforms;
  4. Sale and/or lease of goods and services through digital platforms;
  5. Digital content creation and streaming, including online advertising, blogging/vlogging, subscriptions, and commissions, are income generating activities;
  6. E-retailing of goods and services
  7. Sale of creative or professional services, on-demand or freelance services or digital services supplied over the internet; and
  8. Other forms of businesses other than those mentioned above are conducted online.
 SECTION 4. DEFINITION OF TERMS- In applying the provisions of these Regulations, the following terms shall be defined as follows:
  1. Business Operations - encompass all activities related to commerce, including acquiring, developing, maintaining, owning, selling, leasing, or operating various business apparatuses, including personal and real property.
  2. Brick-and-Mortar Stores- refers to physical retail establishments, operating from a fixed location, where consumers/customers can visit in person to purchase and/or lease goods and/or services.
  3. Closure/Take Down Order- the (CIR) or their representative can close establishment doors and seal them with security devices and the BIR’s official seal. They can also restrict the use of websites or platforms used for trade or business, prohibiting covered persons from selling, posting, listing, or offering goods or services for sale or lease.
  4. Content Creation- this refers to the publishing or production of entertaining or educational content for digital channels like websites, social media, and video platforms, either for subscription, fee, or free, with the aim of generating revenue or monetizing personal brands through content or monetizing their personal brand.
  5. Digital Content/product- refers to data which is produced and supplied in electronic form, such as data that is digitally broadcast, streamed or contained in computer files.
  6. Digital financial services- the public can access financial services via the internet, including banking, insurance, payment, remittance, lending, and investment. Related services are also provided, such as payment and money transmission services.
  7. Digital platform- information and communication technology facilities online transactions in various industries like e-commerce, digital financial services, food delivery, transportation, travel, education, healthcare, and logistics.
  8. Digital Services- refer to those that are provided and accessed through digital infrastructure or based on communications and information technology, which encompasses the services of e-market, web search and/or cloud computing.
  9. Educational Service- refers to services that promote, impart, share, source, or review knowledge through online platforms, applications, websites, or social media accounts, regardless of the provider’s authorization.
  10. E-marketplace- refer to the platform that connects online customers with merchants, arranges deals, process payments, facilitates goods shipment, provides logistical services, and post purchase assistance, while maintaining control over the transaction’s completion, including social media markets, is considered a platform over the consummation of the transactions.
  11. -retailing- refers to selling goods or services directly to online consumers primarily through internet via application, webpage or its own website.
  12. Facility- may include but not be limited to place of production, showroom, warehouse, storage place, garage, bus terminal, or real property for lease with no sales activity.
  13. Lessor- refer to any person, whether natural or juridical, who owns or controls the commercial space and leases it out to another party, which is the lessee.
  14. Lesse- refers to any person who sent or leases commercial space from the property owner or lessor.
  15. On-Demand Services- refer to the availability anytime, such as rides, sharing, meal delivery, grocery delivery, house services, cleaning, repairs, and streaming entertainment, are not predetermined.
  16.  Online Advertising Services- refers to online or web-advertising services (e.g. banner ad, sidebar ad and pop-up ad) or sale of advertising space or time.
  17. Online business- refers to any commercial activity conducted over the internet, including buying or selling goods or services directly to consumers or through digital platform, and includes e-commerce platform, e-marketplace, online sellers/merchants, and e-retail.
  18. Online Freelance Services- refer to work or services offered by self-employed individuals who provide their skills, expertise or services to clients through digital platforms or online channels.
  19. Online travel services- allow the reservation, purchase, or discount of flights, hotel accommodations, and vacation rental spaces through an online platform, application, website, webpage, or social media account, regardless of the provider's e-commerce authorization in the Philippines.
  20. Online Sellers or Merchants- offer non-financial items or services to online consumers through e-marketplaces or third-party digital platforms. E-retailers are considered online merchants if they provide goods or services outside their website on a third-party platform, and the consumer purchases, leases, subscribes to, or acquires their service through the platform.
  21.  Social Commerce- refer to subset of e-commerce where businesses or individuals sell goods, services, or merchandise via social networks or social media platforms for cash payments.
  22.  Stores Name- refers to a primary identifier for the seller’s brand business within the website, webpage, account, page, platform or application.
  23. Trade or business- refers to any activities carried on producing income or profit from selling and/or leasing of goods or properties, and /or performing services.
  24.  Transport and Delivery Services- refers to deliveries arranged through online platforms, applications, webpages, or social media accounts by providers for food, commodities, or merchandise, regardless of their authorization to conduct online business in the Philippines. This includes personal transportation and other courier services.
  25.  Virtual Items in Online Games- refer to items or goods used in online applications or computer networks, enabling simultaneous interaction between single or multiple players and forming social communities within a game environment.


SECTION 5. REGISTRATION- The Regulations mandate that all individuals covered by them must register with the BIR following the Tax Code and relevant revenue issuances, as failure to do so may result in administrative penalties and criminal liabilities. The following guidelines shall be adhered to:
  1. A person selling or leasing goods or services through Brick-and-Mortar Stores must register their head office at the BIR district office, while any branches or facilities must be registered at the BIR district office having jurisdiction over the place of business address or location of the branch and/or facility
  2. A person operating an online presence or online store for their brick-and-mortar store must register their Store Name with the BIR as an additional "business name" attached to the head office or branch, not as a branch.
  3. Individuals or entities without a physical store must register with the BIR district office having jurisdiction over the place of residence for individuals or the principal place of business registered with the SEC for juridical entities for the sale or leasing of goods and services through online platforms or applications.
  4.  
    SECTION 6. POSTING OF CERTIFICATE OF REGISTRATION- The Regulations require registered persons to display their original Certificate of Registration (COR) or Electronic Certificate of Registration (eCOR) at their business location and each branch or facility. For those without a fixed business, the COR/eCOR should be kept in possession of the holder thereof or at the holder's place of residence or head office address, subject to production upon demand by an internal revenue officer.
     
    SECTION 7. POSTING OF PROOF OF REGISTRATION ON ONLINE WEBSITES, E-COMERCE OR E-MARKETPLACE SELLERMERCHANT’S PAGE AND OTHER PLATFORMS- Businesses operating online must display a conspicuous electronic copy of their BIR COR/eCOR on their website, webpage, account, page, platform, or application, making the proof of registration easily accessible to buyers or customers visiting the seller's or lessor's webpage.
     
 SECTION 8. SUSPENSION OF BUSINESS OPERATIONS- The CIR or their representative can issue a Closure/Take Down Order to close business operations of covered persons in the Philippines who fail to register as required under the Regulations. This closure does not prevent the BIR from filing charges against the person or corporate taxpayers under the Run After Tax Evaders (RATE) Program, if evidence warrants.
SECTION 9. DURATION OF CLOSURE/TAKE DOWN ORDER- The Closure/Take Down Order shall not be less than five (5) days and shall be lifted only upon compliance with the requirements stated in Section 5 of the Regulations, and any additional requirements prescribed by the CIR or his/her duly authorized representative
SECTION 10. LIFTING OF THE CLOSURE/TAKE DOWN ORDER- The Closure/Take Down Order can only be lifted if the BIR validates that the violation has been rectified and the person has complied with all requirements prescribed by the CIR or their authorized representatives, following the existing laws, rules, and regulations.
SECTION 11. RESPONSIBILITY OF LESSOR, DIGITAL PLATFORMS, INCLUDING E-MARKETPLACES- Lessors and operators of commercial establishments, including e-marketplace platforms, must ensure that their lessees and online sellers are registered with the BIR, have a Taxpayer Identification Number (TIN), and comply with invoicing requirements in accordance with Sections 236, 237, and 238 of the Tax Code.
The failure to establish or enforce internal mechanisms to prevent lessees and online sellers without the required BIR COR/eCOR from selling, posting, listing, or offering goods or services in their physical stores, websites, accounts, applications, and digital platforms is considered aiding or abetting in the offense.
Commercial establishment owners and sub-lessors must continue to submit reportorial requirements under existing Revenue Regulations, while digital platforms, including e-marketplaces, must submit necessary information upon request from the CIR.
SECTION 12. REPORTORIAL REQUIREMENTS- Regular reports on Closure/Take Down Orders issued and lifted by Bureau implementing offices must be submitted to the CIR or their authorized representative.
SECTION 13. PENALTY- Any person found violating Section 236(A) in relation to the enumerated provisions of the Tax Code shall be liable as follows:
 
[See illustration on the next page]
NATURE OF VIOLATION TAX CODE PROVISION AMOUNT OF COMPROMISE PENALTY
  1. Late Registration- voluntary registration
 Sec. 275 ₱ 1,000
  1. Failure to register store name or business name
 Sec. 275 ₱1,000 per business name or store name
  1. Failure to post COR/eCOR on the place of business or website, webpage, account, page, platform or application.
 Sec. 275
 		 ₱1,000 for every violations/per business name or store name
  1. Allowing lessees or online seller merchants to use to engage in business the premises or digital platform without BIR registration
 Sec. 235 in relation to Sec. 258 ₱ 20,000.00** for each branch / establishment
 
**Penalty of lessor/digital platform/e-marketplace
  1. Failure to obey or refusal to comply with the Closure/Takedown Order
 Sec. 258 ₱ 20,000.00
  1. Failure to Register Head Office or Branch – if the business or self- employed is discovered through various means, including:
  • During Tax Compliance Verification Drive (TCVD)
  • Ocular inspection or mission order
  • Upon BIR notification to register
  • Through third-party reports
 Sec. 258 Medium and Large Taxpayer- ₱20,000
Small Taxpayer- ₱15,000
Micro Taxpayer- ₱5,000
Business subject excise tax- ₱50,000