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BIR eyes new tax on online sellers


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THE BUREAU of Internal Revenue (BIR) is proposing a creditable withholding tax on the income payments made by online platform providers to their partner sellers.

“With the proliferation of online sales transactions through the facilities of online platform providers, there is a need for the BIR to take advantage of this opportunity to identify sellers of goods and services who are therefore obliged to declare their income resulting from these transactions for tax purposes,” the BIR said in an advisory on Thursday.

To get this information, the BIR said a creditable withholding tax should be imposed on the gross remittances of these online platform providers to the sellers.

The BIR proposed to amend Revenue Regulations No. 2-98, which does not cover income payments by online platform providers.

Under the draft rule, the BIR will impose a creditable withholding tax of 1% on one-half of the gross remittances of online platform providers to their partner sellers or merchants.

An online platform provider is an any entity that serves as an intermediary, where sellers and buyers of goods and services transact their business through the use of information technology and other electronic means, and act as the withholding agent of the government.

This includes platforms for marketplaces, food delivery, lodging accommodation, travel or transportation, payment or remittances such as e-wallets, and other services.

Based on this definition, the proposed tax may cover popular platforms like Shopee, Lazada, Airbnb, Grab, Gcash and Maya.

The draft regulation defines gross remittance as the “total amount of the value of the goods or services sold and paid through the online platform facilities.”

“The withholding tax imposed… shall be in addition to the existing withholding tax obligations being imposed on the online platform providers,” the BIR said.

Under the draft rule, online platform providers that do not require the business registration of sellers will only impose the withholding tax if there is a single purchase of goods or services worth P10,000.

The tax will also be imposed if the same buyer and seller have engaged in at least six transactions, regardless of amount per transaction, in the previous or current year.

The BIR is open to comments on the draft rule from stakeholders until May 2.

BIR Commissioner Romeo D. Lumagui, Jr. said last month it is difficult to monitor taxes on individual online sellers on e-commerce platforms.

He has said the BIR is prioritizing ways to better collect taxes from online sellers and other new platforms this year.

The coronavirus pandemic prompted many entrepreneurs to shift to online selling through Shopee and Lazada, as well as social media platforms such as Facebook, Instagram and Tiktok.

There were about two million entities doing business as online sellers as of 2022, according to the Trade department. — Luisa Maria Jacinta C. Jocson

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