BIR to enforce withholding tax on online sellers from July 15

Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui Jr. announced that starting July 15, 2024, electronic marketplace operators will impose a withholding tax on sellers and merchants, in accordance with Revenue Memorandum Circular (RMC) No. 79-2024.

The previous 90-day extension provided under RMC No. 55-2024 will not be extended further.

“Electronic Marketplace Operators will begin imposing Withholding Tax against their sellers/merchants starting July 15, 2024. We have already extended this by 90 days. No further extensions will be given,” Lumagui stated.

The BIR granted the initial 90-day extension to allow compliance with other government agencies’ requirements and to give affected parties time to adjust to Revenue Regulation No. 16-2023 before the withholding tax’s implementation.

“Withholding Tax is not a new tax; it’s merely a system of taxation where taxes are collected at the source and credited against the total income tax liability of the sellers/merchants. The BIR aims to level the playing field between brick-and-mortar stores, which regularly comply 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,” Lumagui explained.

The RMC No. 79-2024 specifically extends the transitory period for digital financial services providers. ​