Due to the COVID-19 oubreak and the subsequent lockdown, the people of the Philippines have got immense free time at home. With time came the brilliant and unique ideas of making some money without having to compromise the comfort of home. Filipinos have found online business as their new forte. They want to explore the online business world more and grab opportunities there.
A report presented by iprice.ph found that online shopping in the Philippines spiked by 57% during the pandemic. Therefore, it can be rightly said that many areas of online marketing in the Philippines are still untapped. Keeping this in mind, starting an online business in the Philippines is a brilliant idea.
Challenges are sure to arrive when there is an opportunity in the business market. With hundreds of online business platforms emerging in the Philippines, the government of Philippines has now levied tax and registration rules. Fret not. Instead, go through this blog that discusses the Philippines e-commerce laws, government regulations and business licenses.
What Are The Legal Requirements For Starting An Online Business in the Philippines?
Now that you are ready to start a business and have a business plan ready at hand, it is time to check into the legal requirements to initiate an online business in the Philippines. To conduct business here, you need these four vital documents:
- Registration of business name with the department of trade and industry (DTI)
As a first step, you must register your business’s name with the DTI. Before filling out the registration form, check out if the business name you proposed is available on the DTI website. On the same website, you will get a referral code through which you have to pay the registration fees. After the DTI website has confirmed your payment, you will get a digital DTI certificate. Use the reference code to download the DTI certificate.
- Barangay business clearance
Once you get the DTI certificate of your business, move on to getting the Barangay business clearance. This is the online business that you will operate right from your home.
– Head to the Barangay Hall with two valid ID proofs, the DTI certificate and address proof. This address proof can be either the certificate of land title (if you are the property owner) or the lease contract of a rented property.
– Fill up the application form and provide all the details that the form demands to get the Barangay business clearance certificate.
- Mayor’s Permit
Like the Barangay business clearance, you must go to the Municipal office or the City Hall here. Carry address proof, ID proof, DTI certificate, and the Barangay business clearance certificate. Next, fill up the application form and produce all the documents to get the Mayor’s permit.
- Bureau of Internal Revenue (BIR) registration
The final and most vital step is registering your business with BIR or the Bureau of Internal Revenue. This authenticates your business and legalizes it. Although this is the final step, it will take the most time, so you may have to be a little patient. To register your business with BIR, these are the three vital steps that you need to follow:
- Registering your business
In this step, you must fill up three sets of BIR form 1901. This is the application for registration available on the BIR website. Next, accumulate all the business documents that you have gathered in the past. It includes the DTI certificate, the Barangay business clearance certificate, the certificate of the Mayor, valid ID proofs, and address proofs. Submit all of these documents to the respective RDO or Revenue District Office.
- Registering book of accounts
There is still work to be done. Your business set up now is just a few steps away. In the next step, you need to register your book of accounts, as that is a record book that maintains all business transactions. Generally, three different types of books are available – loose-leaf books, manual books, and computerized books. Purchase the type of book you are comfortable using and fill in the forms accordingly.
- Getting invoices
To complete the online registration process, figure out the invoice. To sort the invoice, along with the BIR, apply for the ATP or the Authority to Print. Fill up three sets of BIR form 1906 and then submit them along with a sample invoice and the certificate of registration to the BIR RDO. After a week, you will get the ATP from the BIR. Indeed, this process will take some time.
What Are The E-Commerce Laws And Regulations in the Philippines?
To help the people of the Philippines adapt to the new normal, the government has devised some rules and regulations for the proper functioning of the e-commerce sector in the Philippines. The purpose is to secure the e-commerce sector of the Philippines with a legal framework to avoid treachery and deceit. Besides, the Department of Trade and Industry also supervises the growth of the country and generates new policies and regulations to trigger the country’s betterment.
Since the e-commerce business completely runs online, a few online business laws and regulations of the Philippines can be levied for its welfare. These are as follows:
- The Consumer Act for the protection of consumer data online.
- The Data Privacy Act safeguards customers against any kind of civil and administrative infringements.
- The Online Content Regulation Act restricts businesses from selling and promoting indecent or unparliamentary commodities online.
- The Cybercrime and Cybersecurity Act protects consumers from falling prey to hackers or similar other corruption that can lead to data destruction.
- The Online Dispute Resolution and Domain Name Regulation Act registers domain names with business trademarks for authenticity purposes.
How Do I Need To Register My Online Business in the Philippines?
The steps for registering an online business in the Philippines have already been covered above. However, let us review the registration steps briefly.
Step 1: Registering Business Name in DTI
- Preparing business name
- Confirming business name availability
- Filling up the online registration form
- Paying registration fees
- Downloading registration certificate
Step 2: Getting Barangay Business Clearance
- Preparing required documents
- Head to the barangay location of your business
Step 3: Acquiring Mayor’s Permit
- Preparing necessary documents
- Going to the municipal office in the location of your business
Step 4: Registering in BIR
- Getting hold of necessary documents
- Filling up the BIR form
- Going to respective RDO
- Paying registration fees
- Claiming certificate of registration
- Buying and registering in the book of accounts
- Securing Authority to Print
Where To Get A Business License?
To get your business license in the Philippines, you must reach out to the Business Permit and Licensing Office in the municipal town hall of the city where your business is located. Creating a business permit is not a one-time job. Instead, you have to renew it every year. Failing to do so will result in a 25% surcharge on the renewal fee.
What Do You Need To Obtain A Business License?
To get an e-commerce business license in the Philippines, these are the documents you need:
- Area occupancy permit
- Authorization letter of the owner with identity proof
- Barangay business clearance
- Business location sketch
- Certificate of business name registration
- Community tax certificate
- Fire Permit
- Lease contract or tax declaration certificate
- Public liability insurance
- Sanitary permit
- Zoning or locational clearance
Taxes Involved
When you are planning to open an e-commerce business in the Philippines, know that your online business is subject to the following taxes:
- 12% VAT if the annual sales have exceeded 1.92 million
- 3% tax levied on the monthly revenue earned if the amount has not reached the lower limit
- Personal income and other taxes
Conclusion
Now that you are aware of all the steps for registering an e-commerce business in the Philippines, it is your time to explore the world of e-commerce business in the Philippines now. Make sure to price the products correctly and offer good customer service to make them count on you.
