Bureau of Internal Revenue (BIR) Commissioner Romeo Lumagui Jr. on Friday reiterated that the agency will strictly implement the imposition of withholding tax on online sellers.

Lumagui this week has warned online shopping platforms to follow the order on imposing withholding tax on online sellers and to only allow BIR-registered shops on its sites.

The commissioner reiterated the imposition of withholding tax to sellers/merchants by electronic marketplace operators starting July 15, 2024, through Revenue Memorandum Circular (RMC) No. 79-2024. No more extensions will be given after the previous 90-day extension under RMC No. 55-2024.

"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 Chief said they have already granted a 90-day extension, prior to RMC No. 79-2024. The previous extension was given in recognition of the compliance needed with the relative policies or requirements of other government agencies and to give the affected parties an opportunity to adjust with the provisions of Revenue Regulation No. 16-2023 prior to the actual imposition of the Withholding Tax.

He said all online merchants must be registered with the bureau regardless of size and earnings. He also reminded electronic marketplace operators to impose a 1 percent creditable withholding tax on half of the gross remittances to online sellers. This policy started on July 15 this year.

"If online sellers do not register, they should not be allowed to sell on online platforms," Lumagui said.

"If online platforms do not remove unregistered online sellers, they can be shut down," he added.

Lumagui said the new policy is needed to help the economy. He expects billions in pesos of additional revenues because of this new order. This will also help them understand and quantify the online selling sector in the country.

"Withholding Tax is not a new tax, it's merely a system of taxation where taxes are collected at source, which will be 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 are regularly complying with their tax obligations, and online market places. Whether their business is operated online or through physical stores, sellers and merchants have to pay their taxes," Lumagui explained.

"Those involved in brick-and-mortar stores are paying taxes. Why are some online sellers complaining? They should comply because all businesses should pay taxes," he added.

The BIR targets P3 trillion in tax collections this year.