ONLINE SELLERS TO WITHHOLD TAX STARTED ON JULY 15 - BIR

Sellers or merchant in e-commerce platforms or online are now required to withhold tax from their sales after the temporary exemption expired according to the Bureau of Internal Revenue (BIR).

“When we earn money, we generally have to register with our agency and have to pay taxes,” BIR Commissioner Romeo Lumagui Jr. noted.

Online sellers in online platforms are now obligated to withhold tax that took effect on July 15 (Photo courtesy of ABS-CBN News)

Lumagui said that Electronic Marketplace Operators will begin imposing Withholding Tax against sellers/merchants starting July 15, 2024. No more extensions will be given after the previous 90-day extension under RMC No. 55-2024 that expired on July 14, 2024. 

The 90 days extension for collection of withholding taxes was implemented to give the affected parties an opportunity to adjust with the provisions of Revenue Regulation No. 16-2023 and to help businesses comply with the requirements of government agencies.

Under the measure of RR No. 16-2023, electronic marketplace operators and digital financial service providers will withhold 1% creditable withholding tax applied to half of the total gross remittances. 

Sellers with annual gross online sales below and not exceeding to P500,000 or online sellers who is duly exempt from income tax due to existing laws or treaties are exempted.

“If the annual total gross remittances to an online seller for the past taxable year has not exceeded P500,000 and if the cumulative gross remittances to an online seller in a taxable year has not yet exceeded P500,000, the 1% withholding tax shall not be collected,” the BIR said.

Online shopping apps like Shopee and Lazada, food delivery apps, online hotel booking sites, transport service apps and other online platforms are covered by this policy.

"Withholding Tax is not a new tax, it's merely a system of taxation where taxes are collected at source, which will be credited against the total income tax liability of the sellers/merchants,” Lumagui said.

Meanwhile, digital financial services providers are given an additional 90 days or until October 12, 2024 to complete their respective system adjustments to comply with the RR No. 16-2023 under the RMC No. 79-2024.

Source: Philippine Star 

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