Online negosyo ideas: six types and the rules for selling online

Online business types, from fewest to most extra permits

Rules that hit every online seller

These four points come from the Internet Transactions Act (RA 11967), BIR's RR 16-2023 and its circular, RMC 8-2024. They apply on top of DTI, barangay and mayor's permit.^[2,1,11,10]

• Before you can list on an e-marketplace, the platform must collect your name and a valid government ID, or your business registration documents.
• Sellers who run their own online store must publish their business name, address and contact details on the homepage.
• You register with BIR and give your Certificate of Registration to the e-marketplace and e-wallet provider.
• E-marketplaces and e-wallets withhold 1% on half of your gross remittances. RR 16-2023 exempts sellers whose remittances stayed at or under ₱500,000 last year, or have not passed it this year. To claim this, RMC 8-2024 has you give the platform a sworn declaration, received by BIR, then again by 20 January each year.

Selling goods: check the product, not just the platform

JAO 22-01, issued by DTI and other agencies, says online sellers need the same product permits their goods would need in a physical store. The platform does not replace those permits.^[8]

Perfume and beauty products are cosmetics. Distributing any cosmetic without an FDA License to Operate is a prohibited act under RA 9711, and DTI says price tag rules also cover online stores.^[4,5]

Ukay-ukay carries a legal risk most sellers do not know: RA 4653 makes it unlawful to import used clothing, with fines of ₱200 to ₱20,000 and two to five years in prison. Ask your supplier where the bales come from.^[3]

Buy and sell has its own trap. Items sold without a valid receipt are presumed to come from an unlicensed source, and the store needs a police clearance before selling them.^[6]

Selling services online

Virtual assistant and web design businesses sell time and skill. They skip product permits but handle client data. NPC registration becomes mandatory at 250 or more employees, or when you process sensitive personal information of 1,000 or more people.^[7]

If you sell a digital service directly to consumers, the Internet Transactions Act expects it to work as advertised, including functionality, compatibility and security.^[2]

Dropshipping: the seller without the stock

The dropshipping kit lists six extra items: the platform's ID check, publishing your business details, E-Commerce Bureau registration, giving your BIR certificate to the platform, the 1% withholding and the sworn declaration that can stop it.^[2,1,10]

With dropshipping you never hold the stock, but you are still the seller to the customer. Price tags, product permits and the withholding rules above apply to you, not only to your supplier. Choose suppliers who can show registered products and receipts.

Questions people ask

Do online sellers need a business permit?

Yes. An online business registers the same way as a physical one, with DTI, the barangay, the city and BIR. Product permits still apply under JAO 22-01.

How much tax does Shopee or Lazada withhold?

Under RR 16-2023, e-marketplaces and e-wallets withhold 1% on half of a seller's gross remittances. If yours will not pass ₱500,000 for the year, RMC 8-2024 lets you give the platform a sworn declaration, received by BIR, to stop the withholding.

Is selling ukay-ukay online legal?

Selling used clothing locally is a business you register like any other, with price tags and a police clearance for goods from unlicensed suppliers. Importing used clothing commercially is unlawful under RA 4653.

Do I need FDA approval to resell perfume online?

Distributing cosmetics without an FDA License to Operate is prohibited under RA 9711. Check that you and your supplier hold the right licence before you list.