DTI leads the charge for a safer e-commerce landscape in the Philippines

Online shopping has brought a lot of convenience to the lives of consumers. It has also created a more competitive business landscape, especially for the country’s micro, small and medium-sized enterprises (MSMEs). In 2023, the Department of Trade and Industry (DTI) registered an unprecedented 984,330 business names, up 5 percent from the previous year. Interestingly, 18,153 of these registrations were categorized under the business activity of “Online Retail.”

However, just like with financial transactions, fraudsters have found new ways to exploit online transactions, and such fraudulent activities are affecting Filipinos’ confidence in electronic commerce (e-commerce).

However, fears of online fraud should start to diminish with the implementation of Republic Act No. 11967 or the Internet Transactions Act of 2023 (ITA), which was signed into law on December 5, 2023. This comprehensive legal framework aims to build trust among online consumers, online sellers, retailers, e-marketplaces, and digital platforms engaged in e-commerce. The law also encourages fair competition, creating an environment where the benefits of the digital economy are accessible to all.

Among the key elements of the ITA is the creation of the E-Commerce Bureau (ECB) to ensure effective implementation. The ECB is tasked primarily with collecting relevant data from digital platforms and online merchants for policy and program purposes; ensuring compliance with registration requirements under the law; directing, tracking, and ensuring the prompt resolution of online consumer complaints; and developing consumer education and information programs.

DTI, through its newly established Digital Services Office (DSO), will implement the Online Negosyo Program (ONP). The ONP, which was developed by the E-Commerce Bureau, is an enhanced version of Oplan’s TLC (Training, Learning, & Capacity Building) program, which offers comprehensive training modules to enhance digital literacy and leverage various e-commerce platforms. A key feature of the ONP is its strategic partnership with large companies to equip smaller partners, contractors, and subcontractors in their supply chains with the necessary digital skills and tools. The ONP aims to improve the ability of businesses to expand access to digital technologies and new markets through e-commerce, increase the use of electronic payments, and strengthen links with logistics supply chains.

To ensure the relevance and effectiveness of the ONP, DTI has partnered with Hapinoy, Thames International and Bayan Academy, as well as other government agencies.

In addition to creating the ECB, the ITA sets out Codes of Conduct for both online businesses and consumers. For businesses, key points include:

• Always treat your customers honestly, fairly and fairly.
• Apply consumer rights equally, without distinction or discrimination.
• Refrain from engaging in illegal, fraudulent, unethical or unfair business practices that harm consumers.
• Comply with applicable laws and regulations.
• Providing and making available accurate information about goods and services offered and sold online to Filipino consumers before, during and after an online transaction.
• Ensure that goods and services sold online comply with Philippine regulatory standards.
• Ensure the safety of goods and services offered for sale online and do not market or sell products that have been withdrawn from retail sale.
• Ensure that goods and services are easily accessible, accurately described, and promoted through fair advertising and marketing practices.
• Provide consumers with accurate and complete cost information via a sales invoice or official receipt that details the cost of the goods or services purchased, including shipping and delivery costs, to avoid hidden fees or additional costs.

Consumers, in turn, are educated about responsible online shopping practices with the following reminders:

• Please respect intellectual property rights and do not buy counterfeits or share digital content illegally.
• Be familiar with and abide by the seller’s policies, terms and conditions.
• When transacting online, you must provide truthful information.
• Protect your privacy and security by using secure payment methods and staying alert for online scams.
• Be prepared to pay cash on delivery or via electronic transfer.
• Communicate respectfully with all parties involved in the transaction.
• Provide honest feedback and use refund options responsibly.

“This legislation is a key step toward building a more inclusive and vibrant e-commerce landscape in the country,” said DTI Secretary Fred Pascual. “It lowers entry barriers and lowers operating costs for businesses, especially SMEs, and enables companies to compete on a level playing field with large enterprises, accessing markets that were previously beyond their reach.”

The ITA complements DTI’s comprehensive efforts to integrate digital technologies aimed at improving the competitiveness and scalability of SMEs, enabling them to access skilled resources and a broader market while reducing costs and increasing productivity. DTI initiatives include the Barangay Micro Business Enterprises (BMBE) program, which actively encourages online micro-entrepreneurs to register their businesses as BMBEs to take advantage of income tax exemption and other benefits offered by the government, especially in light of Tax Regulations No. 16-2023 issued by the Bureau of Internal Revenue (BIR).

This requires electronic marketplaces (e-marketplaces) and digital financial service providers (DFSPs) to withhold income tax at the rate of 1% from the gross 1/2 of remittances to online sellers/merchants. However, companies that are duly exempt (such as those covered by RA9178 or the BMBEs Act of 2002) or whose gross remittances are less than P500,000 per year may be exempt from this withholding tax.

The DTI also launched the E-Commerce Philippines 2028 Roadmap, a strategic plan that outlines 13 key strategies and 28 deliverables to boost domestic and cross-border e-commerce. It places a strong emphasis on inclusiveness, ensuring that the benefits of e-commerce reach all sectors of society, including youth, women, people with disabilities and seniors.

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This article is sponsored by DTI through the Philippine Daily Inquirer.