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Senator Sherwin Gatchalian has called out the Bureau of Internal Revenue (BIR) over its plans to impose taxes on small time online merchants.

Gatchalian, vice-chair of the Senate Committee on Economic Affairs, said the proposal of BIR is not only “ill-timed” but also insensitive, considering looming recession and record-high jobless rate due to the global COVID-19 pandemic.

Gatchalian stressed that the BIR should defer its plan to impose taxes on online sellers since it will only add “unnecessary burden to ordinary Filipinos who are trying to make ends meet to feed their families who are hit hard by the ramifications of strict quarantine measures.”

“Importante ang tamang timing sa pagtatakda o pagtataas ng buwis. Hindi tama ang timing ng BIR na patawan ng tax ang mga online sellers na karamihan sa kanila ay nagsisimula pa lang makabangon muli dahil nawalan ng trabaho nuong kasagsagan ng Enhanced Community Quarantine (ECQ),” said Gatchalian.

Gatchalian warned that taxing online goods and services during the pandemic will only prompt digital entrepreneurs to pass on the additional expenses to their customers—mostly belonging to the middle-class brackets.

“Dahil sa kailangang mapanatili pa rin ang social distancing lalo na’t wala pang nadidiskubreng bakuna sa COVID-19, mas hinihikayat pa nga natin ang lahat na gumamit ng teknolohiya para lumipat na sa tinatawag na digital economy,” he added.

He also cautioned the government that the supposed “premature” taxation on online sellers at the height on an economic turmoil triggered by the global pandemic “will impede the growth of the country’s growing digital economy.”

“I believe premature taxation will only do harm than good to our growing digital economy,” he warned.

Citing a recent study by Google and Temasek, the Philippine internet economy posted a Gross Merchandise Value (GMV) of $7 billion in 2019.

The value pales in comparison with Malaysia ($11 billion), Vietnam ($12 billion), Singapore ($12 billion), Thailand ($16 billion), and Indonesia ($40 billion).

According to Gatchalian, the Philippines has not yet generated unicorns—a tech startup company that reaches a valuation of $1 billion—nor has the Philippine economy economy reflected the dynamism the Indonesian and Vietnamese e-Commerce markets have reached, at 2.9 percent and four percent of GDP, respectively.

“Before we impose new taxes on the digital economy, we should first think of ways on how we are going to develop this industry in order to provide more jobs and opportunities to all Filipinos,” he said.

The Philippines’ e-Commerce market remains at 1.6 percent of GDP, according to Gatchalian.

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