No withholding tax for small online sellers

The Bureau of Internal Revenue on Monday said small-scale online sellers have been exempted from paying withholding tax.

In his Facebook post, BIR Commissioner Romeo Lumagui Jr. said that this is in compliance with BIR Regulation 16-2023 and Memorandum Circular 8-2024.

He said such tax exemption emphasizes the government’s sympathy and sense of fairness toward hard-working small entrepreneurs who provide various goods and services to Filipinos.

Lumagui added the exemption aims to educate online sellers of various business sizes about their tax duties, as withholding tax is still required from players that are not characterized by the following three conditions.

Under the BIR regulations, the withholding tax exemption applies first, only to those that had an annual total gross remittance worth P500,000 or below in the past year.

Second, those that have a cumulative gross remittance within that same range.

Last, those that are exempt or subject to a lower income tax rate under any other existing law or treaty.

“The BIR has a friendly and approachable stance as regards the taxation of online sellers. We know that most of them do not have the intention to evade taxes,” Lumagui said.

Under its Tax Compliance Verification Drive, he said the BIR will continue to conduct learning sessions for businesses of all sizes as it targets to collect P3.05 billion in tax revenues this year.

“We have to be fair to the retail sector and brick and mortar stores that are regularly paying their taxes. It is your responsibility to pay taxes like everyone else,” Lumagui said.

He reported 44,611 business establishments have been educated about taxes under the tax drive.