Withholding tax on online sellers not a new tax: BIR

The 1 percent withholding tax on online sellers is not a new tax and not all sellers will be affected by the measure, the Bureau of Internal Revenue said on Tuesday.

“Hindi tayo nagpapataw ng panibagong buwis. Walang bagong binabayarang buwis. Ang binabayarang buwis dito ay income tax,” said BIR Commissioner Romeo Lumagui Jr.

The BIR said “Revenue Regulations No 16” imposes a withholding tax on gross remittances made by electronic marketplace operators and digital financial services providers to sellers/merchants for goods and services sold/paid through the former’s platform/ facility.

BIR imposes 1 percent withholding tax on online platforms, digital service providers

Lumagui said this is meant to improve collection and encourage more small and medium-sized businesses to register.

“Kapag kumikita po tayo, generally kailangan mag rehistro dito sa aming ahensya at kailangan magbayad ng buwis,” said Lumagui.

The measure imposes a 1 percent creditable withholding tax on half of the gross remittances made by electronic marketplace operators and digital financial service providers to sellers or merchants. This translates to 0.5 percent of the total gross remittances.

Exempted are those who have annual gross remittances not exceeding P500,000, or if the online seller is duly exempt pursuant to any existing law or treaty.

Online shopping apps, food delivery apps, online hotel booking sites, transport service apps and other online platforms are covered by this policy.

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The apps or websites will have to withhold 1 percent of half of the gross remittances sent to their merchants, partner drivers or online sellers

Some companies affected are Lazada, Shopee, FoodPanda, Grab, Angkas, AirBnB and other sites registered in the Philippines.

E-wallet platforms like GCash and Paya are also covered, the BIR said.

Physical stores who have a business account with any e-wallet platforms will also be subjected to the same policy. Personal accounts however, are not covered.

But Lumagui also assured the public that prices of goods will not be affected, because the policy only affects bigger businesses and even without this new policy, sellers will still need to pay taxes anyway. (ABS-CBN News)