How to register an online business in the Philippines

Selling online is a business, so register it

BIR issued RMC 60-2020 on 1 June 2020 reminding online businesses to register or update their registration and to comply with tax rules, as announced by the Department of Finance. That circular's no-penalty window ended on 31 July 2020, so it is history now, but the rule behind it was not new: selling online is doing business.^[4]

DTI's reason is trust. In 2020 it said there is greater traceability if online sellers are registered, and this increases the trust factor with buyers.^[3]

Register once, before you start. BIR says business registration is done only once, before commencing business, and you can do it online through ORUS. The fee is a ₱30 documentary stamp tax for your Certificate of Registration.^[5]

The registration path for an online seller

DTI's business name fees run from ₱200 for barangay scope to ₱2,000 for national scope, plus a ₱30 documentary stamp tax. DTI defines scope as the area where your offices, stores or branches may be located, and says it is not a limit on where you may transact business.^[6]

1. Register the business nameSole proprietors register on DTI's BNRS. Pick the scope by where you work and keep stock, not by where your buyers are. Selling to buyers all over the country does not by itself call for national scope.
2. Get barangay and city permitsYour business location is where you work and keep stock, often your home. The barangay clearance and mayor's permit come from that city.
3. Register with BIRUse ORUS or your RDO. You will get a Certificate of Registration and register your books and invoices.
4. Get product permitsFood, cosmetics, health products and others may need permits from the agency that regulates them before you list them.
5. Set up your shop pageShow your business name and keep your invoices and price details in order.

JAO 22-01: the joint rules for online business

Joint Administrative Order 22-01 was issued by DTI, DOH, DA, DENR, IPOPHL and the National Privacy Commission. It says online merchants must secure the licenses, permits and other certification requirements that apply to what they sell.^[2]

It also brings store rules online. DTI said that the price tags required on items in physical stores are also required for products sold online. Put the price on the listing; "PM for price" does not meet that rule.^[2]

Example: you sell homemade chili garlic oil on a marketplace app. Before listing it, ask the food regulator what permits a food product needs, register your business, and show the price on every listing.

RA 11967: if you sell from your own website

The Internet Transactions Act of 2023 separates two kinds of seller. An online merchant sells goods or services to online consumers through an e-marketplace or third-party platform. An e-retailer sells directly to online consumers through its own website, webpage or app.^[1]

E-retailers must publish on their homepage their corporate and trade or business name, and their contact details, which must include a mobile or landline number and a valid email address. Those details go to the government with at least one government ID or registration document as proof of identity.^[1]

The law also creates an E-Commerce Bureau under DTI, which may require digital platforms and online merchants to register with it and submit information.^[1]

Check DTI announcements to see whether that registration has started.

Tax on platform payouts

Under RR 16-2023, e-marketplace operators and digital financial services providers withhold tax on what they remit to sellers. The rate is 1% on one-half of gross remittances, which works out to 0.5% of the gross amount. Delivery fees billed separately, sales returns and discounts, and VAT collected for the seller are not part of the gross remittance.^[7]

There is no withholding if your total gross remittances for the past year did not exceed ₱500,000, or while your remittances in the current year have not yet passed ₱500,000. Example: a seller whose platform payouts reach ₱500,000 in August is not withheld on before that point; payouts after it are withheld at 0.5%, so a ₱20,000 payout would have ₱100 withheld.^[7]

Which rules apply to which seller?

Questions people ask

Do I need DTI registration to sell on Shopee or Lazada?

If you use a business name as a sole proprietor, you register it with DTI. DTI says registered sellers are more traceable and trusted. Platforms also set their own seller requirements.

Do I need a mayor's permit for an online shop?

Yes. DTI says businesses must secure a mayor's permit or municipal license from the city or municipality where they are located. For most online sellers, that is where they work and store goods.

What is the difference between an online merchant and an e-retailer?

Under RA 11967, an online merchant sells through an e-marketplace or third-party platform, and an e-retailer sells through its own website, webpage or app.

Will the platform withhold tax from my earnings?

Only once your gross remittances pass ₱500,000 for the year, or if last year's passed ₱500,000. Then it withholds 1% on half of the gross remittance under RR 16-2023.