New barter trade emerging as Filipinos cope with pandemic effects, but DTI says it’s illegal

July 15, 2020 - 7:29 AM
Singles Day shopping
Move over big mall sales! Filipinos are getting crazier about online shopping especially on Singles Day.

The Department of Trade Industry warned Filipinos against engaging in the “online barter trade” amid the novel coronavirus pandemic because it is not taxed.

Barter trade or barter is the exchange of one commodity or service to another instead of money.

Marketing firm iPrice Group found a resurgence of the age-old practice within social media communities, wherein a surprising 407% search volume was found in Google for the term from April to May.

Similar to online selling, this was seen as an alternative option for Filipinos whose livelihood were affected during the duration of the strict lockdown, which was part of the national government’s measures to supposedly curb the spread of COVID-19.

However, during the regular Laging Handa briefing on July 14, Trade Secretary Ramon Lopez said that such activity is illegal because it is not taxed.

Lopez cited the provinces of Sulu, Tawi-Tawi and Jolo in Mindanao as the only places where barter is allowed and legal.

“Mayroon po tayong mga na-allow na barter trade according to the EO issued by the President. Very limited po iyan sa Sulu—Jolo, at Tawi-Tawi. Pero po sa ibang lugar ay hindi po allowed iyong barter trade. At saka kailangan ho, ano pa, iyong regular transaction tayo diyan at saka dapat ho ay may tax na binabayaran,” he said.

Lopez explained that barter is allowed in selected places in Mindanao because of the “nature” of their livelihood, particularly those near the coastal waters.

He said that a composite team of the DTI and members of the Philippine National Police and the National Bureau of Investigation have already started going after against individuals involved in barter activities.

Lopez also mentioned receiving 1,000 to 10,000 complaints since January, which was before the lockdown and no COVID-19 case was detected yet.

However, these are related to online selling and “not on barter.”

“But in general dito po sa mga online from 1,000 I think, in January of this year to 10,000, ang ibig sabihin ang mga complaints. Ganoon din kadami kasi tumalon ang transaksiyon sa online selling lalo na iyong quarantine, the height of the quarantine period,” he said.

The Bureau of Internal Revenue also previously issued a memorandum that seeks to tax digital merchants despite the platforms being the compensation of Filipinos for their financial losses for over two months of quarantine.

Following the wave of criticisms against the agency, the Palace said that online businesses that earn below P250,000 per year are exempted from paying taxes.

Possible reasons for the new form of barter

In a study conducted from April to May, which was when the government implemented shifts in quarantine from the enhanced community to the modified ECQ version, iPrice Group found that aside from the “barter” term, there was also a 203% jump in the term “barter trade” in Google.

iPrice Group managed to analyze 85 popular Facebook barter groups comprising 2,150,448 Filipino members.

Out of these groups, 72% are communities outside of Metro Manila, which comprises 1,902,873 Facebook users.

The difficulty in the transport of goods outside of the capital during the lockdown might have been the reason why bartering is practiced more in the provinces.

“Being an archipelago, it is a challenge to transport goods from one place to another. Filipinos living in Metro Manila might have a lesser need to resort to bartering than in other major cities and provinces in the Philippines,” iPrice said.

In the agency’s study, the following reasons for engaging in barter were deduced.

  • Easier access to essential items particularly medical supplies and groceries
  • For decluttering items at home that are no longer needed
  • Socialization purposes