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Online sellers to pay 1% withholding tax, BIR says

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Online sellers who earn more than ₱500,000 annually will now be subject to a 1-percent withholding tax, the Bureau of Internal Revenue (BIR) announced on Tuesday.

The tax agency issued Revenue Regulation 16-2023, which requires electronic marketplace operators and digital financial services providers to withhold 1 percent of one-half of the gross payments they make to online merchants using their platforms.

Electronic marketplaces are “digital service platforms whose business is to connect online buyers/consumers with online sellers/merchants, facilitate and conclude the sales, process the payment of the products, goods or services through such digital platform, or facilitate the shipment of goods or provide logistic services and post-purchase support within such platforms.”

These are websites or apps that facilitate online transactions, such as e-commerce, food delivery, and accommodation booking. They also provide services such as payment processing, shipping, and customer support.

The BIR said that the withholding tax aims to ensure that online sellers comply with their tax obligations and contribute to the government’s revenue collection.

The regulation, however, does not apply to online sellers whose annual gross payments do not exceed ₱500,000. They are still required to register with the BIR and file their income tax returns.

Online sellers who are entitled to a lower income tax rate under any existing law are also exempted from the withholding tax, provided that they submit the necessary documents to the BIR.

The regulation will take effect 15 days after it is published in the Official Gazette or a newspaper of general circulation.

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Bryan is a geek at heart and a tech enthusiast by choice. He has a strong background in corporate communications, marketing services, and customer relations having worked in the telecommunications and banking sectors for over two decades. In his spare time, he enjoys watching clips on YouTube and binge watching shows on Netflix.

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