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July 15, 2020
DTI: Personal barter transactions are tax-exempt
Trade Secretary Ramon M. Lopez clarified on Wednesday that personal barter transactions are not covered by registration requirements, and are not subject to tax.
Lopez issued the statement after he warned on Tuesday that the government will go after individuals engaging in online barter trade as the practice is against existing laws.
While there is no clear prohibition on local barter trade, the Department of Trade Industry (DTI) chief also said this is subject to tax if it is being done in the course of regular trade or business.
"This is also applicable for online transactions. However, local barter trade activities with less than P3 million gross sales per year may avail of value added tax (VAT) exemption," Lopez said.
The DTI noted that, in 2018, President Duterte issued Executive Order (EO) 64, which regulates barter trade. The EO also established the Mindanao Barter Council, tasked to supervise and coordinate barter activities in the Philippines.
Under EO 64, barter trade is only allowed in three areas, namely in Siasi and Jolo in Sulu and Bongao in Tawi-Tawi. Outside those areas, barter trading across borders is not allowed.
"This is what I meant as illegal—those done in other areas or if done online and cross border, or as a regular business in the course of trade—as these are not registered and not taxed," Lopez said.
Lopez issued the statement after he warned on Tuesday that the government will go after individuals engaging in online barter trade as the practice is against existing laws.
While there is no clear prohibition on local barter trade, the Department of Trade Industry (DTI) chief also said this is subject to tax if it is being done in the course of regular trade or business.
"This is also applicable for online transactions. However, local barter trade activities with less than P3 million gross sales per year may avail of value added tax (VAT) exemption," Lopez said.
The DTI noted that, in 2018, President Duterte issued Executive Order (EO) 64, which regulates barter trade. The EO also established the Mindanao Barter Council, tasked to supervise and coordinate barter activities in the Philippines.
Under EO 64, barter trade is only allowed in three areas, namely in Siasi and Jolo in Sulu and Bongao in Tawi-Tawi. Outside those areas, barter trading across borders is not allowed.
"This is what I meant as illegal—those done in other areas or if done online and cross border, or as a regular business in the course of trade—as these are not registered and not taxed," Lopez said.