Online sellers’ compliance to withholding tax order ‘positive’ —BIR

Two months after it subjected merchants in online platforms under the withholding tax system, the Bureau of Internal Revenue (BIR) on Tuesday said the compliance among online sellers with the order was “positive.”

“Malaki ang numero ng mga nagrehistro na mga online sellers so kung ‘yan muna ang basehan nakita natin maganda ang itinatakbo nitong ginawa natin,” BIR Commissioner Romeo Lumagui Jr. told reporters at the sidelines of a partnership renewal signing with multi-sectoral groups in Quezon City.

(There is a large number of online sellers who registered. If that is the basis, it means we are doing well.)

Under Revenue Regulation No. 16-2023, which took effect on July 15, one-half of the gross remittances of e-marketplace operations and digital financial services providers to the sellers or merchants for goods or services paid through their platform shall be subject to a 1% creditable withholding tax.

The withholding tax is the amount withheld by a business in payments of goods or services directly remitted to the government on behalf of suppliers or employees.

The BIR clarified earlier that the 1% withholding tax shall not be collected “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 BIR defines “gross remittances” as the total amount received by an e-marketplace operator or digital financial services provider from a buyer or consumer for the goods and services sold by or paid to the seller or merchant through the platform of the e-marketplace operator.

“Naging positive naman at nakita natin maraming nagrehistro at nagko-comply,” Lumagui said.

(The reaction was positive because we saw a lot of them register and comply.)

“Wala akong figure as of now, ang alam ko lang substantial ito,” he said.

(I don't have the exact figure. but I know that it's substantial.)

The taxman had argued that with the proliferation of online sales transactions through the facilities of online platform providers, there was a need to take advantage of the opportunity to identify sellers of goods and services who are, therefore, obliged to declare their income resulting from these transactions for tax purposes. —VAL, GMA Integrated News