Selling Online in the Philippines as a Foreign Seller: Requirements Under the Internet Transactions Act

Foreign sellers who sell online to Philippine buyers are covered by Philippine law. Under the Internet Transactions Act of 2023 (Republic Act No. 11967), a person who engages in e-commerce and avails of the Philippine market to the extent of establishing minimum contacts is subject to Philippine laws and cannot evade liability despite having no legal presence in the country. This is the law's extra-territorial application under Section 5. The practical path: register with the DTI's E-Commerce Bureau, disclose required merchant information on your listings, comply with product and consumer rules, and honor the redress and takedown mechanisms the law creates.

Who counts as a foreign online seller

The law applies to all business-to-business and business-to-consumer internet transactions within the mandate of the Department of Trade and Industry (DTI), where one party is situated in the Philippines or where the digital platform, e-retailer, or online merchant is availing of the Philippine market and has minimum contacts therein. Consumer-to-consumer transactions and online media content are not covered.

An online merchant is a person selling non-financial goods or services to online consumers through an e-marketplace or third-party digital platform. An e-retailer sells directly to consumers through its own website, webpage, or application. A foreign seller can fall under either definition depending on how it sells.

Registration and disclosure requirements

The E-Commerce Bureau, created under the DTI, is tasked with enforcing registration of digital platforms and online merchants and requiring submission of information for policy-making and program development. The Bureau also maintains an Online Business Database of digital platforms, e-marketplaces, e-retailers, and online merchants engaged in e-commerce in the Philippines, giving consumers access to contact information of online businesses.

If you sell through an e-marketplace, the platform is required, as far as practicable, to require all online merchants — whether foreign or Filipino — to submit the following before listing:

• Name of the online merchant, with at least one valid government identification for individuals or business registration documents for juridical entities;
• Geographic address where the online merchant is located;
• Contact details, including a mobile or landline number and a valid e-mail address; and
• Where the service is connected with a regulated profession, details of membership in the relevant professional body.

If you sell through your own website as an e-retailer, you must publish on your homepage your corporate and trade or business name, the address of your physical shop or place of business, contact details including a mobile or landline number and valid e-mail address, and, for regulated professions, your professional membership details. These must be submitted to the Bureau, accompanied by at least one government identification card or registration document as valid proof of identity.

Product listing and consumer-facing rules

E-retailers and online merchants must indicate the price of goods and services offered, consistent with Article 81 of Republic Act No. 7394, the Consumer Act of the Philippines. Goods must be received by the online consumer in the same condition, type, quantity, and quality as described, and must fit the particular purpose communicated at the time the contract was perfected and accepted by the seller.

Sellers must also issue paper or electronic invoices or receipts for all sales, and e-retailers must maintain an accessible and efficient redress mechanism for client complaints. E-marketplaces must require merchants to clearly indicate the name and brand of the goods or services, price, description, and condition in their product offers.

Liability and enforcement

The e-retailer or online merchant is primarily liable for indemnifying the online consumer in civil actions or administrative complaints arising from the internet transaction. E-marketplaces and digital platforms that facilitated the transaction may be subsidiarily liable where they failed to exercise ordinary diligence in complying with their obligations, failed after notice to act expeditiously in removing infringing or takedown-ordered listings, or where the online merchant has no legal presence or is insolvent.

The DTI Secretary may issue compliance orders to require conformity with the Internet Transactions Act, the Consumer Act, or other applicable trade and consumer protection issuances. The Secretary may also issue takedown orders directing the removal of a listing or offer, and may blacklist non-compliant online businesses in a publicly accessible list furnished to digital platforms and financial regulators.

Tax and import considerations

Under the Consolidated Value-Added Tax Regulations of 2005 (Revenue Regulations No. 16-2005), any person who, in the course of trade or business, sells, barters, exchanges, or leases goods or properties, or renders services, and any person who imports goods, is liable to VAT. Importers — whether individuals or corporations, and whether or not the importation is made in the course of trade or business — are liable for VAT on importation, which must be paid prior to release of the goods from customs custody. Non-resident persons who perform services in the Philippines are deemed to be making sales in the course of trade or business, even if the performance of services is not regular.

Frequently asked questions

Can a foreigner sell online in the Philippines without a local business?

The Internet Transactions Act applies to foreign sellers who avail of the Philippine market and establish minimum contacts, and they cannot evade legal liability despite lacking legal presence in the country. In practice, the platform or the seller must still submit the required merchant information before listing.

What information must a foreign online seller provide to an e-marketplace?

At minimum: the merchant's name with a valid government ID or business registration document, geographic address, contact details including a mobile or landline number and valid e-mail address, and professional membership details where the service is a regulated profession.

What happens if a foreign seller violates the law?

The DTI may issue a compliance order or a takedown order, and may blacklist the online business. The seller remains primarily liable to the online consumer in civil or administrative complaints.

Practical takeaways

• Confirm whether your sales to Philippine buyers create minimum contacts; if so, the Internet Transactions Act applies to you even without a local office.
• Submit complete merchant information to the e-marketplace before listing, or publish the required disclosures on your own homepage if you sell as an e-retailer.
• Indicate price, name and brand, description, and condition in every product offer, and issue invoices or receipts for all sales.
• Maintain a working redress mechanism for consumer complaints and respond to DTI compliance or takedown orders promptly.
• Account for VAT on importation and on sales in the course of trade or business under Revenue Regulations No. 16-2005.

Primary sources

The rules discussed above are drawn from the following primary sources. Where the firm's library holds the document as a PDF it is embedded here in full; the rest are cited by title.

RR No. 16-2005 — Prescribes the Consolidated Value-Added Tax Regulations of 2005 superseding RR No. 14-2005 (Published in Manila Times on Oct. 21, 2005) Digest | Full TextOpen in Law LibraryDownload PDF

• REPUBLIC ACT NO. 8792 - AN ACT PROVIDING FOR THE RECOGNITION AND USE OF ELECTRONIC COMMERCIAL AND NON-COMMERCIAL TRANSACTIONS, PENALTIES FOR UNLAWFUL USE THEREOF, AND OTHER PURPOSES

• REPUBLIC ACT NO. 11967 - AN ACT PROTECTING ONLINE CONSUMERS AND MERCHANTS ENGAGED IN INTERNET TRANSACTIONS, CREATING FOR THIS PURPOSE ELECTRONIC COMMERCE BUREAU, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.