ARELLANO UNIVERSITY SCHOOL OF LAW

Menlo St., Pasay City

THE SUFFICIENCY OF IMPLEMENTING RULES

AND REGULATIONS IN TAXING ONLINE
SELLERS

In Partial Fulfillment of the Requirements in

TECHNOLOGY AND THE LAW
Thursday, 5:30PM to 7:30PM
1st Semester, 2014-2015
Submitted to:
ATTY. ROMULO DE GRANO JR.
Submitted by:
LEIDA MAE L. BUMANLAG
2012-0651

TABLE OF CONTENTS

Introduction

1-2

Significance of Study

3-4

Review of Literature

Freedom of Expression and

Right of Privacy

Void for Vagueness Doctrine

10

Facial Challenge and

Overbreadth Doctrine

12

Constitutional Proscription of
Double Jeopardy

18

Conclusion

20

Bibliography

22

Discussion

ABSTRACT

TABLE OF CONTENTS

Introduction

Significance of Study

Review of Literature

Freedom of Expression and

Right of Privacy

Void for Vagueness Doctrine

10

Facial Challenge and

Overbreadth Doctrine

12

Constitutional Proscription of
Double Jeopardy

18

Conclusion

20

Bibliography

22

Discussion

TABLE OF CONTENTS

ABSTRACT

INTRODUCTION

Review of Literature

Freedom of Expression and

Right of Privacy

Void for Vagueness Doctrine

10

Facial Challenge and

Overbreadth Doctrine

12

Constitutional Proscription of
Double Jeopardy

18

Conclusion

20

Bibliography

22

Discussion

Abstract

The drastic change and development in the technology has brought the world to
numerous dimensions and almost in all aspects of living of the people. From education, gadgets,
new machines and devices, communication, new inventions and even to our market, Of course
marketing and advertisement has its own growth by itself, but in this paper a certain marketing
style will be discussed profoundly in its relation with the evolving technology that the world has
to offer.
In basic selling the parties are primarily the seller and the buyer. The buyer will visit the
place or the location of the store wherein the transaction takes place. However, with the
intervention of the technology and the latters response to evolving needs and problems of the
people there exist what is called online selling. This type of business in marketing trends in the
world now and what numerous people are resorting into, mainly because it is just one click away.
People are, most of the time, if not all, are in a rush and have no time for leisure or
treating themselves with stuff that is sold in the market. Usually, people failed to go shopping for
their needs because of want and lack of time. Also, malls and stores in the Philippines, not to
mention malls in abroad, are being too small for the growing buyers. Therefore, with these, the
evolution of new style of selling is born. Online selling has answered the different problems and
inconveniences. In addressing the problem of lack of time to shop has been simplified by the
sellers who goes online and sell their goods and products. However, in every convenience and
new inventions there are always consequences that will later exist.
The main issue that has been throwing against these online sellers circulates on whether
they are paying their taxes or not. Like other sellers in the market, these online sellers are also
need to be subject of taxation. By the principle of equality and uniformity in taxation, all sellers
should be treated alike who are similarly situated. The dilemma with this issue is that not all
online sellers are even aware that there is a law applicable to them. E-commerce Law has been
passed and approved to treat this online sellers same as with the other sellers. Also its
Implementing Rules and Regulation has been laid down to empower what it is in the law for its
better execution and implementation.
In this paper, the sufficiency of the Implementing Rules and Regulation will be focused
on. How does the rule being implemented and why does it seem insufficient making the online
sellers not knowledgeable about the law
The increasing demands of internet and online activity carry with it complex issues on
privacy and security, contractual and regulatory problems. These concerns though not new in the
internet world, need to be clarified and to be addressed.
With the advent of R.A. 8792 some questions as to the legal recognition of electronic
document, data messages, electronic signatures and electronic contracts had been defined.
Internet subscribers were ensured of their privacy for penalizing the offense of hacking and
piracy.
Republic Act No. 8792 known as E-Commerce Act is the effect of the merging of the
House Bill No. 9971 and Senate Bill No. 1902. It was signed into law on June 14, 2000. A
month later or on July 14, 2000, the Implementing Rules and Regulations (IRR) was digitally
signed by Secretaries Manuel A. Roxas II (DTI) and Benjamin E. Diokno (DBM) and Governor

Rafael B. Buenaventura (BSP) during the plenary session of the Global Information
Infrastructure Commissions (GIIC) Asia Regional Conference held in Makati City, Manila.1
In general, the E-Commerce Act intends to assist domestic and international dealings,
transactions, and exchanges of information through the utilization of Information Technology.
Moreover, the Act recognizes the authenticity and reliability of electronic documents for the
promotion and use of electronic transaction.
Such is the nature of E- Commerce that it generates profits for the private investors and
provides goods and services for the traders. In this view, the government sees the need of taxing
cyber trade in exchange of the protection and services rendered by the government. Hence, the
researchers are prompted to conduct a study on the how such trade is taxed, and as to how it is
enforced.

Introduction
In this modern age where electronic technology had reached global market for various
undertakings such as but not limited to selling of goods through cyberspace, it is noteworthy to
identify legal issues and potential risks to ensure a safe and secure environment for trading and
other internet transactions.
Due to the increasing demand and recognition of the vital role of the InfoTech in nation
building, the E- Commerce Law was enacted. This was approved in order to warrant a healthy
and friendly atmosphere in procuring goods and providing services in the internet world. The
1

birth of this Act provided security on the part of the investors as well the consumers or traders.
This removes the clouds of doubts in the mind of each trader that his or her rights are protected
and that his or her privacy is secured. And since more and more Filipinos are beginning to shop
online, the countrys e-commerce potential is expected to grow even more with the emergence of
enabling technologies.
Online shopping or online retailing is a form of electronic commerce whereby the
consumers directly buy goods or services from a seller over the internet without any intermediary
service. An online shop, e-shop, e-store, internet shop, web shop, web store, online store, or
virtual store evokes the physical analogy of buying products or services at bricks-and-mortarretailer or shopping center.
However, the taxability of our online retailers has become an issue due to the
insufficiency of the regulations being executed in collection on such taxes. The Bureau of
Internal Revenue has issued recently the Revenue Memorandum Circular No. 55- 2013 entitled
Reiterating Taxpayers' Obligation in Relation to Online Shopping. The said circular was
formulated to imperatively remind the parties to the transaction of their tax obligations.
The Memorandum Circular specifically provides that like any other business
establishments, persons who conduct business through online transactions and its permutations
have the obligations to register the business at the Revenue District Office (RDO) having
jurisdiction over the principal place of business/head office or residence in case of individuals by
accomplishing BIR Form 1901 for individuals or Form 1903 for corporations and partnerships
and pay the registration fee to any Authorized Agent Bank (AAB) located within the RDO. Also
to issue registered invoice or receipt, either manually or electronically, for every sale, barter,
exchange or lease of goods and properties, as well as for every sale, barter or exchange of
service. Said invoice or receipt shall conform to the information requirements prescribed under
existing revenue issuances and shall prepared at least in duplicate , the original to be given to the
buyer and the duplicate to be retained by the seller as part of the latter's accounting record. They
are required to file applicable tax returns on or before due dates, pay correct internal revenue
taxes, and submit information returns and other tax compliance reports such as the Summary List
of sales/purchases at the time or times required by existing rules and regulations. The
memorandum as well requires them to keep books of accounts and other business/accounting
records within the time prescribed by law, and such shall be made available anytime for the
inspection and verification by the duly authorized Revenue Officer for the purpose of
ascertaining compliance with tax rules and regulation. The memorandum was also clear in
providing that any person engaged in the internet commerce who fails to comply with the
applicable tax laws, rules and regulations shall be subject to the imposition of penalties provided
for under the existing laws, rules and regulations, in addition to the penalties pursuant to the
applicable Sections under Chapter II and IV, Title X of the National Internal Revenue Code of
1997, as amended.
Also under Implementing Rules and Regulations of our E- Commerce Law, under
paragraph 5 section 3 of which states that transactions conducted using electronic commerce
should receive neutral tax treatment in comparison to transactions using non-electronic means
and taxation of electronic commerce shall be administered in the least burdensome manner.
Thusly, just like all retailers, online stores must collect sales tax. Notwithstanding the fact that
online transactions make up only about 1 percent of total retail and are mostly made up of
occasional sellers, still the government must pursue more stringent executions of its laws and
implementing rules regarding the collection on tax online sellers on sites such as multiply.com,
sulit.com.ph, e-bay Philippines, alibaba.com, ayosdito.ph and even Facebook should be
registered, issue electronic invoices, and pay taxes the way entrepreneurs with physical stores do.

Besides purchasers and sellers will be definitely the beneficiaries themselves of these taxes from
the on their protection, education, health care and other services that sales taxes financed. And of
course, internet retailers could not get their wares to their customers without the airports and
roads that state and local governments maintain, all of which, again, are financed through sales
and other taxes.
Significance of the Study
In this age of technology, where everything is moving so fast and everything is tuned in
an instant, we cannot but forced ourselves to be abreast with the innovation so that we may be
equipped in the world advancement. For in a wink of an eye, we may forever left behind.
The same goes with the laws and our rules. In todays generation where people
recognized the importance of information technology in nation building, laws must be revisited
and reviewed in order to adopt in this fast changing world.
This research will aid in revisiting R.A. 8792 and other pertinent provisions relating to
Electronic Commerce. Moreover, this study addressed itself to: cyber traders, online
merchants and government that they may gain valuable insights and awareness in engaging in the
e-business industry. This will contribute to future studies of law students interested in ECommerce.
Finally, this study intended to be a guide for future court decisions regarding these
prevalent issues on e-business, such as; issues on jurisdiction in case of conflict against foreign
corporations and to stamp the issue on taxability of the trade and services that are exchanging
from line to line.

Statement of the Problem

In seeking to sufficiently apply the law through its implementing rules and regulations the study
would like to provide solution to the problem of awareness to the regulation and so as to its
stringent implementation. Online sellers are gaining income so as like other sellers thusly they
need also to be taxed by the government.
It is undeniable that E-Commerce is a profit generating device, thus must be subject to
tax. Most sellers now transacts through their personal facebook accounts, and if these
transactions are done on a regular basis, it would make him or her engaged in business which
must be registered and the sales of which must be registered and the sales transactions of which
must be accompanied with the issuance of receipts and/or invoices. Taxation is said to be the life
blood of the government in the absence of it the State will not exist. It is then but right to tax the
cyber trade in exchange of the protection it received from the government and in exchange to the
public services granted by the government which are directly or indirectly crucial factors in
conducting the online shopping and retailing. The E- Commerce Law, its Implementing Rules
and Regulations, the revenue Memorandum Circular no. 55-2013 are all but good legislations of

the government however on sufficiency wise these are but lacking. There are still existing online
retailers who do not register their business however big or small it is, worse is that some of them
may not even know that they are already engaged in business which must be registered. In reality
what really is happening is that the sale transactions begin and end with no legal conformities to
the existing laws. The buyer usually visits the page of the online seller and picks the item or
product he desires to avail. Next would be informing the seller or owner of the internet site,
facebook accounts and the like of his orders. The seller in return would ask the buyer to deposit
the payment of the product plus the shipping fee through a bank or through Cash Express Door
to Door Delivery like LBC, western Union and the like. After payment, the buyer will receive the
item or product through the same door to door delivery. In such a case both parties consumated a
sale transaction without having to comply with the legal requirements.

Scope and Limitations

The scope of the study includes taxation of online retailers and their business registration.
However, it does not include other issues which had already been settled and do not call for
interpretation.
In the first exploratory phase on the issue the paper would like to cover transactions using
the internet in the Philippines as a mode of business dealings. It covers all the goods and services
exchanged in online shopping as the object for taxation. These objects provided by the seller
were hosted by the server to open a forum for buyers in making negotiations. In case taxation is
proper, this paper intends to set guidelines for stricter and proper monitoring of e-business
transactions.

Methodology
This chapter identifies the appropriate research method to be used in conducting the
study. This paper will utilize qualitative data collection. The researcher will gather relevant
information and laws from the specified documents and compiling databases in order to analyze
the material, provide legal basis and arrive at a more complete and comprehensive understanding
of the subject.
The instruments to be used to extract information are identified. The researcher will
utilize the use of internet resources to gather related literature pertaining to the fact in issue.
This research is descriptive in character. The researcher will examine facts and conditions
relating to the subject matter. The researcher will collect factual evidence, laws and jurisprudence
to provide for a legal basis in providing a position. Thus, this paper aims to provide an accurate
account of a subject by utilizing evidence and laws in resolving the fact in issue. As a result this
study is explorative in nature.

Review of Related Literature

The Lifeblood Doctrine of Taxation

Taxes are the lifeblood of the nation. Without revenue raised from taxation, the
government will not survive, resulting in detriment to society. Without taxes, the government
would be paralyzed for lack of motive power to activate and operate it. In the case of CIR vs
Algue, it is laid down that axes are the lifeblood of the government and there prompt and certain
availability is an imperious need. Taxes are the lifeblood of the nation through which the
agencies of the government continue to operate and with which the state affects its functions for
the benefit of its constituents
Benefits Received Principle
Also in the case of CIR vs Aguirre it was held that despite the natural reluctance to
surrender part of ones hard earned income to the taxing authority, every person who is able to
must contribute his share in the running of the government. The government is expected to
respond in the form of tangible or intangible benefits intended to improve the lives of the people
and enhanced their material and moral values. In return for his contribution, the taxpayer
receives the general advantages and protection which the government affords the taxpayer and
his property.
One is compensation or consideration for the other. Protection for support and support for
protection. However, it does not mean that only those who are able to pay taxes can enjoy the
privileges and protection given to a citizen by the government. The only benefit to which the
taxpayer is entitled is that derived form the enjoyment of the privileges of living in an organized
society established and safeguarded by the devotion of taxes to public purpose. The government
promises nothing to the person taxed beyond what maybe anticipated froman administration of
the laws for the general good.

Principle of Equality
Equality of taxation as a maxim of politics, means equality of sacrifice. It means
apportioning the contribution of each person towards the expenses of government so that he shall
feel neither more nor less inconvenience from his share of the payment than every other person
experiences from his. This standard, like other standards of perfection, cannot be completely
realized; but the first object in every practical discussion should be to know what perfection is.
[J.S. Mill (1848, Book V, Chapter II)]. The equal sacrifice principle has often been invoked to
justify specific types of tax schedules. In particular, some have claimed that it justifies
progressive, or at least nonregressive, taxation. Since a dollar of tax falls more lightly on a rich
man than on a poor one, it seems right that the rich should pay at a higher rate than the poor if all
are to sacrifice equally. But in fact, equal sacrifice only implies that the rich should pay more in
tax. As Schumpeter remarks, This error can be found, as a witness to our loose habits of
thinking, in the writings of quite reputable economists, though it should be obvious that, given
the intention to take away equal amounts of satisfaction, nothing follows from the law of
decreasing marginal utility of income except that higher incomes should pay higher absolute
sums than lower incomes. [Schumpeter (1954, p. 1070, n.3)].
Implementing Rules and Regulation of E-Commerce Law

As declared under the Implementing Rules and Regulations of E-commerce Law

Section 3 (d) Neutral Tax Treatment. - Transactions conducted using electronic
commerce should receive neutral tax treatment in comparison to transactions using
non-electronic means and taxation of electronic commerce shall be administered in the
least burdensome manner.

chanrobles

The abovementioned provision provides that taxing online sellers is same as taxing the
non-electronic sellers. There is no exemption to pay tax unless the law expressly provide.
Section 3 (f) Electronic Commerce Awareness. - Government and the
private sector will inform society, both individual consumers and businesses, about the
potentials of electronic commerce and its impact on social and economic structures.

The Bureau of Internal Revenue issued Revenue Memorandum Circular number 55-2013.
This intends to govern how individuals and businesses should handle their sales and taxes
accordingly.
Sellers rendering the following services are covered by this guideline:
Online shopping or online retailing This includes e-commerce business owners who owns a
website and sells their own products and services. An online shop, e-shop, e-store, internet shop,
web shop, webstore, online store, or virtual store evokes the physical analogy of buying products or
services at a bricks-and-mortar-retailer or shopping center.
Online intermediary service An intermediary is a third party that offers intermediation
services between two trading parties. The intermediary acts as a conduit for goods or services offered
by a supplier to a consumer, and receives commission therefor. In this case, the relationship between
the intermediary and the merchant shall be that of a principal-agent relationship which shall be
governed by their agreement including but not limited to the amount of commission, manner of
transmitting the same, etc. However, in the following instances the intermediary service provider
shall be considered the merchandiser / retailer itself:
a. when consumers buy goods or services from an intermediary service
provider who controls such collection of buyers payments, and
thereafter receives commission from the merchant / retailer
b. when the intermediary markets multiple products for its own account
(considered retailer or merchandiser as to the said products).
E-Commerce Business Owners are required to issue invoices or official receipts to customers. Give
acknowledgment receipt for amount received from payment gateways. Pay the commission of
payment gateways net of withholding tax.

Like any other business establishments, persons who conduct business through online
transactions and its permutations have the obligations to:
1.

Register the business at the Revenue District Office (RDO) having jurisdiction over the principal
place of business / head office (or residence in case of individuals), by accomplishing BIR Form
1901 (for individuals) or 1903 (for corporations or partnerships), and pay the registration fee to
any Authorized Agent Bank (AAB) located within the RDO. A BIR Certificate of Registration shall
be issued by the RDO, reflecting therein the tax types required of the concerned taxpayer for
filing and payment, which shall be displayed conspicuously in the business establishment;

2. Secure the required Authority to Print (ATP) invoices / receipts and register books of accounts
for use in business, which may either be:

a. Manual books of accounts, booklets of invoices / receipts, accounting records or loose-leaf of

such;
b. Computerized Accounting System (CAS) and / or its components including e-Invoicing System
under Revenue Memorandum Order (RMO) No. 21-2000 as amended by RMO No. 29-02.
3. Issue registered invoice or receipt, either manually or electronically, for every sale, barter,
exchange, or lease of goods and properties, as well as for every sale, barter, or exchange of
service. Said invoice or receipt shall conform to the information
requirements prescribed under existing revenue issuances, and shall be prepared at least in
duplicate, the original to be given to the buyer and the duplicate to be retained by the seller as
part of the latters accounting records;
4. Withhold required creditable / expanded withholding tax, final tax, tax on compensation of
employees, and other withholding taxes. Remit the same to the Bureau at the time or times
required, and issue to the concerned payees the necessary Certificate of Tax Withheld.
5. File applicable tax returns on or before the due dates, pay correct internal revenue taxes, and
submit information returns and other tax compliance reports such as the Summary List of Sales /
Purchases (SLS/P), Annual Alpha List of Payees, etc., at the time or times required by existing
rules and regulations; and
6. Keep books of accounts and other business / accounting records within the time prescribed by
law, and such shall be made available anytime for inspection and verification by duly authorized
Revenue Officer/s for the purpose of ascertaining compliance with tax rules and regulations.
The existing tax laws and revenue issuances on the tax treatment of purchases (local or
imported) and sale (local or international) of goods (tangible or intangible) or services shall be
equally applied with no distinction on whether or not the marketing channel is the
internet/digital media or the typical and customary physical medium.
The table below provides on how online sellers issues receipt with respect to different means
of purchasers payment.

Transactions

thru Credit Card

thru Banks

Cash on Delivery or PickUp by the Customer

(a) issue electronically the

BIR registered Invoice /
OR (Official Receipt) for
the full amount of the sale
to the buyer;(b) issue
Online Shopping
or Online
Retailing-If
buyers payment

(a) issue Invoice / OR

acknowledgment receipt to
(Official Receipt) to the
the credit card company
buyer for the payment of
for the amount received;
the goods / services;
and
and(b) issue

Issue either electronically

or manually the BIR
registered Invoice / OR
(Official Receipt) for the

acknowledgment receipt to full amount of the sale to

the bank for the amount the buyer.

is:
(c) pay the commission

received.

of credit card company

net of 10% Expanded
Withholding Tax
(EWT).
If the Online
Intermediary-

(a) Issue electronically the (a) issue the invoice / OR

invoice / OR (Official
(Official Receipt) for the

1. Secure the invoice / OR

(official receipt) from the

control the
collections /

Receipt) for the full

amount of the sale to the

merchant before delivery

of goods to

payments of
buyers or

buyer;(b) Issue
acknowledgment receipt to buyer/performance of
acknowledgment receipt to the bank for the amount service and to;2. Issue

markets
products /

the credit card company

for the amount received;

services for its

own account,
and are therefor
(c) Pay the commission
considered the
of credit card company
retailer /
net of 10% EWT
merchant:

(d) Remit the balance to

the merchant retailer
net of intermediarys
agreed mark-up /
commission (include in
the said remittance to
merchant / retailer the
10% EWT to be remitted

full amount of the sale to

the buyer;(b) issue

received;

(c) remit the amount to

the merchant retailer
net of intermediarys
agreed mark-up /

either electronically or
manually the BIR
registered Invoice / OR
(official receipt) for the
full amount of the sale to
the buyer.

commission (include in
the said remittance to

3. Issue OR for the

merchant / retailer the

10% EWT to be remitted

amount of commission
received, if agent.

by merchant to the BIR)

by merchant to the BIR)

(a) Issue the merchants
(a) Issue the merchants
acknowledgement receipt acknowledgement receipt
(for goods) / Official
Receipt (for services) for

(for goods) / Official

Receipt (for services) for

buyer to claim the goods / buyer to claim the goods / 1. Secure the invoice / OR
service (in this case, the
service (in this case, the
(Official Receipt) from the
merchant acting as the
principal shall assign a

merchant acting as the

principal shall assign a

merchant before delivery

of goods to buyer /

number of pads of such

number of pads of such
performance of service
receipt to the intermediary receipt to the intermediary and to2. Issue either
If the Online
Intermediary is
the agent of the
merchant:

/ agent);(b) Ensure
merchant delivers the

/ agent);(b) Ensure
merchant delivers the

electronically or manually
the BIR registered Invoice

goods to buyer with

accompanying invoice or

goods to buyer with

accompanying invoice or

/ OR (Official Receipt) for

the full amount of the sale

merchant performs the

purchased service;

merchant performs the

purchased service;

to the buyer.

(c) Issue OR (Official

(c) Issue OR (Official

3. Issue OR (Official
Receipt) for the amount

Receipt) to merchant for

the full amount of the

Receipt) to merchant for

the full amount of the

of commission
received, if agent

agreed commission, and

reflecting therein the

agreed commission, and

reflecting therein the

amount withheld by
merchant.

amount withheld by
merchant.

Discussion
a. Taxation challenges on E-Commerce
Electronic Commerce is defined as the process of buying and selling goods electronically by
consumers and from company to company through computerized business transactions .2
It has changed the manner of doing businesses in the country. A lot of businesses are
already selling goods and services online. Banking sectors, travel industry, clothing lines, and
other industries are now being offered online. E-commerce likewise has changed how the
government agencies and offices deliver its services towards opportunities for better tax
administration.
However, the E-commerce Act including its implementing rules and regulations and the
tax code do not have a clear definition of proper characterization of income derived from
digitized transactions.3 The internet and E-commerce have confronted huge challenges to tax
administrators such as the proper characterization of income, challenge on audit and collection,
and lack of audit trail.
E-commerce transactions are hard to track down and trace in the absence of papers on
which to establish audit trails, as it is, the cost of discovery methods for conventional taxable
transactions is already quite high, but with the increasing use of electronic processes, our
conventional audit skills would have to be enhanced at considerable expense in order to match
the required computerized auditing skills in an E-Commerce regime.4
Taxing on-line professional service also arise when actual service is being provided
through the internet which involves the establishment of an ongoing relationship between the
foreign service provider and a local customer. Examples of such service would be providing
consultancy work on-line, and even on-line gambling. 5 Article 14 [Independent Personal Service]
and Article 15 [Dependent Personal Services] of the tax treaties adopt a length of stay test,
normally an aggregate of 183 days as one for the criteria to determine the rendition of services in
the source country is taxable. With the Internet, certain services can be performed without even
setting foot in the source country. One can access the internet and download various information
and avail of various services such as consultancy, advisory, designs without even requiring the
service provider to be physically present in the source country.
Transactions can therefore occur directly between the parties and without the knowledge
of tax authorities simply because there is no more need to establish physical presence in the
country by the service provider.6 A tax loss should likely be anticipated.
CONCLUSION
The Philippines still has a number of hurdles to face, even though E-commerce is gaining
momentum in the country. The E-commerce law is confronted with challenges as regards to the
2

Padilla, Joan M. RA 8792: An Overview of ITs Impact on the Philippine legal System viewed
September 10, 2013,
http://ustlawreview.com/pdf/vol.L/Articles/The_Electronic_Commerce_Act_RA_8792.pdf
3
Basu, Subhajit and Jones, Richard. Taxation of Electronic Commerce: A Developing Problem
viewed September 16, 2013,
http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan007357.pdf
4
Lacson, April and Pasadilla Gloria. E-Commerce in the Philippines: A Preliminary Stocktaking
viewed Sept 16, 2013, http://serp-p.pids.gov.ph/serp-p/details.php?

pid=3922&param=Lacson%2C+April
5
ibid., p.4
6
Cueto, Franklin. Legal Ramifications of Philippine E-Commerce viewed September 16, 2013,
http://ublawjournal.tripod.com/issue/jan-mar2000/legal_ramifications.html

proper characterization of income, challenge on audit and collection, lack of audit trail, and
jurisdiction in case of conflict.
The country has to exploit the potential of the internet in facilitating the e-commerce
transactions and continue the use of information communication technology to strengthen tax
administration to attain transparency in its operations and empowerment of revenue personnel in
the performance of its functions at the same time collect tax dues on clearly taxable incomes
earned or gained over the internet.
Moreover, the complex taxation issues brought about by E-commerce need to be
addressed on both international and national level. On the international level, the issue should be
focused on the right of a State to exercise its sovereign power within its jurisdiction. On the
national level, it should focus on the application of existing taxation regimes to different ecommerce transactions. The BIR shall implement E-Commerce taxation by taking into
consideration all the accepted and agreed taxation principles with other nations. In order to
achieve high international acceptance, cooperation between and among tax administrators of
different jurisdictions must be achieved.