The Bureau of Internal Revenue (BIR) announced that digital marketplace operators, such as Shopee and Lazada, have begun collecting the withholding tax on sellers or merchants using their platforms.
“Electronic marketplace operators will begin imposing a withholding tax against their sellers/merchants starting July 15, 2024. We have already extended this by 90 days. No further extensions will be given,” shared BIR Commissioner Romeo Lumagui Jr.
This tax was issued by BIR last December (Revenue Regulation 16-2023), requiring online sellers with annual earnings of over PHP 500,000 to be subjected to a 1% withholding tax.
The tax will apply to half of the gross remittances made by online marketplace operators and digital financial services like GCash and Maya, which sellers use to sell their goods or services online. This also includes credit card providers that process online and mobile transactions.
Gross remittances are the total amount an online marketplace or e-wallet provider receives from buyers of goods and services online.
“The BIR aims to level the playing field between brick-and-mortar stores, which are regularly complying with their tax obligations, and online marketplaces. Whether their business is operated online or through physical stores, sellers and merchants have to pay their taxes,” explained Lumagui.
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