Bureau of Internal Revenue Commissioner Romeo Lumagui Jr. on Thursday reiterated that the BIR is strictly implementing the withholding tax on online sellers.
Lumagui warned online shopping platforms to follow the order and allow only BIR-registered shops on their sites.
The BIR imposed the withholding tax on sellers and merchants in the electronic marketplace beginning 15 July 2024 under Revenue Memorandum Circular 79-2024.
“We had already extended this by 90 days. No further extensions will be given,” Lumagui said.
He said all online merchants must register with the bureau regardless of size and earnings. He reminded electronic marketplace operators to impose a 1-percent creditable withholding tax on half of the gross remittances to online sellers.
“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 of pesos in additional revenues because of this new order. This will also help the BIR understand and quantify the online selling sector in the country.
“The withholding tax is not a new tax, it’s merely a system of taxation where taxes are collected at source, to be credited against the total income tax liability of the sellers and 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 in physical stores, sellers and merchants have to pay their taxes,” Lumagui explained.
“The brick-and-mortar stores pay their 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.