The Bureau of Internal Revenue (BIR) has imposed a withholding tax on online sellers but postponed the collection of a similar tax from digital financial service providers.
BIR issued Revenue Memorandum Circular (RMC) No. 79-2024 on July 15, 2024, reminding e-marketplace operators that the grace period for them to collect withholding tax on the gross remittances to online sellers or merchants has lapsed.
In a statement, BIR commissioner Romeo Lumagui Jr. said no more extensions will be given after the previous 90-day extension under RMC No. 55-2024.
RMC 79-2024 states that all electronic marketplace operators shall impose the withholding of tax to sellers or merchants beginning July 15, 2024.
On the other hand, digital financial service providers (DFSPs) have been given another 90-day transitory period to collect withholding tax to provide them additional time to finally complete their respective system adjustments for compliance with the requirements of Revenue Regulations (RR) No. 16-2023. The new deadline for DFSPs is October 12, 2024.
Issued on December 21, 2023, RR 16-2023 imposes withholding tax on the gross remittances made by e-marketplace operators and digital financial services providers to sellers or merchants for goods and services sold or paid through the e-marketplace or DFSP’s platform or facility.
Under RR 16-2023, remittances of e-marketplace operators and DFSPs to merchants shall be subject to a creditable withholding tax rate of 1% on one-half of such gross remittances by e-marketplace operators and DFSPs.
All existing unregistered sellers or merchants selling goods and services in an e-marketplace or DFSPs are required to register with the BIR and submit a copy of the BIR-issued Certificate of Registration.
After the transitory period for registration, e-marketplace operators and DFSPs shall not allow unregistered businesses to sell goods and services on their platform or facility.
On April 15, 2024, the BIR issued RMC 55-2024 extending by 90 days or until July 14, 2024, the imposition of withholding tax by e-marketplace operators and DFSPs to provide taxpayers sufficient time to comply and adjust to the requirements of RR No. 16-2023 and other government agencies.
This is the second extension after the BIR released RMC 8-2024 on January 15, 2024, which provided for a 90-day transitory period to comply with RR 16-2023.
