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TRJ 2004 Vol XVI No 3-a: Development of E-Commerce in the Philippines: Implications on the Indirect Tax System

The study looks into the development of electronic commerce (e-commerce) in the Philippines, identifies the problems associated with the taxation of e-commerce transactions and the impact of e-commerce on indirect taxes (VAT). The widespread use of the Internet in the Philippines and the enactment of RA 8792 (Electronic Commerce Act) have resulted in an increase in e-commerce transactions such as banking, shopping, travel booking, entertainment, research, etc. Moreover, e-commerce is also being used in the government for the conduct of various services. For example, in the Department of Finance, there have been a number of online facilities such as the Claim Tracking System in DOF Proper, Electronics Filing and Payment System, E-Submission, E-Tax Identification Number System, E-Broadcasting in the BIR; and the Express Cargo Facility in the BOC. Notwithstanding the advantages of e-commerce in taxation, it also brings complex taxation issues. Among these issues is the applicability of the VAT on goods purchased from foreign online businesses where it is difficult to determine the tax jurisdiction and the taxes applicable. Considering the myriad of taxation issues brought by e-commerce, there is a need for clear and consistent rules for e-commerce transactions both at the international and local levels so as not to disrupt business in the e-commerce market with unforeseen tax liabilities and disputes. In this regard, broad international cooperation and consensus on taxation policies and principles among countries is important. On the part of the Philippine government, it should take steps towards creating an environment that stimulates the growth of e-commerce in the country. As the technology in the country is still emerging, it needs first to develop systems to increase Internet use in the country until the technology has taken roots and prospered. It should draw a lesson from the well-advanced experience of foreign economies in this field.

National Tax Research Center
Authors Keywords
National Tax Research Center; electronic commerce (e-commerce);
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