BARTER: TAXABLE OR NOT?

  

With the proliferation of online selling, the government has announced its move to levy taxes from online sellers. They are now required to register their businesses with the Bureau of Internal Revenue (BIR). With that, their income derived from online selling will now be determined and shall be subjected to appropriate taxes depending on the amount of income as may be determined by the enforcing government agency.

Photo from www.prospectsds.com

There was a loud outcry from people affected by the new measure implemented by the government. But as it is said - the law is the law. Online sellers must register their businesses or face apt penalty or punishment as may be imposed by the new regulation.

Rumor has it that the new craze of barter, particularly in the Province and City of Iloilo (where the practice was revived and relived recently), will follow suit as a new target by the government to impose a tax upon. The truth of the matter is, BARTERING under the law is also subject to taxation way before this Barter Group Craze came forth. 

As provided for under Republic Act 8424, otherwise known as the National Internal Revenue Code of 1997, specifically in Section 105 thereof, states that:

    "Any person who, in the course of trade or business, sells barters, exchanges, leases goods or properties, renders services,...xxx... shall be subject to the value-added tax (VAT) imposed in Section 106 to 108 of this Code."

Take note, however, that in order to be covered by such provision of the NIRC, the BARTER for that matter must be in the course of trade or business. So does this mean that all who participate in the barter transactions will be levied a value-added tax? In the same provision of the law, it provides that:

    "The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person...xxx"

It is therefore clear that ONLY those who are REGULARLY engaging in BARTER will be covered by the provision of the law. In other words, if one engaged in BARTERING only ONCE or perhaps TWICE or THRICE he is not yet liable to pay the VAT. People who engages in the said activity continuously and regularly must have a second thought, as they MAYBE required to pay necessary taxes. 

In one Barter Group, there are several posts stating "12th Barter..." (among others). Beware, this might be construed that one is engaging regularly in a trade or business thus, he may be levied specific tax or taxes, as the case may be.

Deep breath...!

Members of a barter group have nothing to fret about as long as their barter activity is OCCASIONAL and of DIMINIMIS VALUE -  means the value of the things involve is minor or trivial to merit the imposition of tax. Hence, tuloy ang ligaya! 

To barter a CAR or a REAL PROPERTY (land, etc.) then expect that the BIR will be on your tail na mas mabilis pa sa alas kwatro. 

It has been said that there are only two things that are certain in life: TAX and DEATH. However, let the latter mind its own business as no one is certain when one will befall from it - but TAX will surely hap on everyone whether dead or alive.

#barter #bartergroup #tax #ra8424 #VAT #diminimis