DTI Says Online Barter Trade is Illegal

Online barter trade has made the rounds recently, as some homeowner groups resorted to entering deals online where they were able to exchange items that they do not need anymore without the involvement of money. Through online barter, parties agree to exchange their items whether both items are of equal value or not.

However, the Department of Trade and Industry (DTI) declared such transactions as illegal.

During the Laging Handa Press Briefing, DTI Secretary Ramon Lopez said that barter trades are only allowed in ‘very limited’ areas in Mindanao and it is not legal in the rest of the country, adding that people must resort to regular transactions and pay the corresponding taxes.

online barter trade

The DTI chief further added that since it is illegal, the government will track down such activities and a composite team composed of the DTI and Philippine National Police (PNP) may be deployed.

Value-added tax

According to the website of the Bureau of Internal Revenue (BIR), the value-added tax is a form of sales tax. A tax on consumption levied on the sale, barter, exchange or lease of goods, properties, or services in the country and on the importation of goods into the Philippines, VAT is an indirect tax that may be shifted or passed on to the buyer, transferee or lessee of goods, properties, or services.

The BIR website also said that the sale of goods and properties will have a VAT rate which is equal to 12 percent of the gross selling price or gross value in money of the goods or properties sold, bartered, or exchanged.

online barter trade

Any person who sells, barters, exchanges goods or properties, or engages in the sale or exchange or services in the course of trade or business is liable to register as a taxpayer if;

  • his gross sales or receipts for the past 12 months, other than those exempted under Section 109 of the National Revenue Code of 1997, have exceeded P3,000,000, or;
  • there are reasonable grounds to believe that his gross sales or receipts for the next twelve months will exceed P3,000,000.

A VAT-registered person shall issue a VAT invoice for every sale, barter, or exchange of goods or properties, or a VAT official receipt for every lease of goods or properties, and for every sale, barter, or exchange of services.