The implementation of a tax for online sellers is being considered before December.

The Internal Revenue Bureau(BIR) therwise difficult

Hopes are high for the implementation of a creditable withholding tax on partner-merchants of online platforms by the beginning of December, which would otherwise be a challenging task. fficial said.

“The timeline for the process could potentially be condensed, and we may reach a resolution prior to December. It is not unrealistic to anticipate a resolution before the beginning of December,” stated BIR Assistant Commissioner Jethro M. Sabariaga during the SGV Tax Symposium last week.

By delaying this release, you are hindering a substantial portion of current economic transactions,” he stated.

The BIR last week released the fi

The final version of the revisions to Revenue Regulation No. 2-98 currently does not include income payments made by online platform providers.

Under the fi

In the final version, the BIR would require domestic e-marketplace operators to withhold 1% of the gross remittances to online merchants for goods or services sold on their platform.

The withholding tax will not be applicable if the total amount of money sent to an online merchant in the previous tax year is less than P250,000, or if the total amount sent to an online merchant in a single tax year has not yet reached P250,000.

ficate of Tax Exemption.

draft rules was

Mr. Sabariaga mentioned that the Bureau of Internal Revenue (BIR) acknowledged the feedback and opposition to the proposed regulations from impacted industries. The BIR’s designated date for receiving comments from stakeholders on the initial rules has passed.fi

The final version was completed on October 27th.

I will consider all of this and then carefully examine it.fi
He stated that the final version will be published and made public.

Under the final draft, the BIR defined an electronic marketplace  as a digital platform whose business is “to connect online consumers with online merchants, facilitate and conclude the sales, process the payment of the products, goods or services through platform, or facilitate the shipment of goods or provide logistics services and post-purchase support within such platforms, and otherwise retains oversight over the consummation of the transaction.”

These would include websites for purchasing items online, apps for food delivery, platforms for reserving lodging at resorts, hotels, motels, and inns, as well as other marketplaces for services or products.

The BIR had fi
In April, the proposal to implement a withholding tax on online sellers was first introduced by RST.

After that, Mr. Sabariaga stated that the agency reached out to different industries for input in order to create the most recent edition of the draft.

He stated that this is the initial presentation of the proposal, and it is important to take into account the different industries, how the withholding tax will apply to them, the rates, and the economic implications.

The BIR has been searching for methods to impose taxes on the digital economy, specifically as online commerce saw a significant increase during the pandemic.

In 2022, the digital economy made up 9.4% of the gross domestic product, amounting to P2.08 trillion. E-commerce specifically experienced the greatest growth at 26.5%, contributing 20% or P416.12 billion to the economy.

In addition to the income tax for internet merchants, the Marcos administration has suggested implementing a value-added tax for digital services.

In November of 2022, the House of Representatives passed a proposal to implement a 12% value-added tax (VAT) on digital service providers who are not residents. A comparable proposal is currently awaiting approval from a committee in the Senate.

If approved, a 12% value-added tax will be applied to the digital sales of services such as internet advertising, video-on-demand subscriptions, and the provision of other services that are conducted through online platforms, livestreams, and mobile apps, among others. – Luisa Maria Jacinta C. Jocson