With the 1% withholding tax on online sellers already in effect, Bureau of Internal Revenue (BIR) expects to collect billions of Pesos from the said sellers although they could not give an estimate on how much could be collected, according to a GMA Network news report.
To put things in perspective, posted below is an excerpt from the GMA news report. Some parts in boldface…
The Bureau of Internal Revenue (BIR) is expecting to collect billions of pesos in taxes from the growing e-marketplace industry after it subjected online sellers under the withholding tax system.
“Itong withholding tax on online transactions, dahil effective na ‘yan, inaasahan natin na malaki rin ang maitutulong nito,” BIR Commissioner Romeo Lumagui Jr. told reporters at the sidelines of the agency’s 120th anniversary celebration in Pasay City on Thursday.
(The withholding tax on online transactions, since this has been effective, we expect it could help immensely.)
Lumagui said the BIR cannot yet give an estimate how much it can collect from imposing withholding tax on online sellers.
“But, we’re expecting that ‘yung revenues natin diyan would be in the billions,” he said.
The BIR’s plan to impose withholding tax to merchants in e-marketplaces took effect on July 15, 2024.
Under its Revenue Regulation (RR) No. 16-2023, one-half of the gross remittances of e-marketplace operations and digital financial services providers to the sellers or merchants for goods or services paid through their platform shall be subject to a 1% creditable withholding tax.
The BIR, however, said the 1% withholding tax shall not be collected “if the annual total gross remittances to an online seller for the past taxable year has not exceeded P500,000” and “if the cumulative gross remittances to an online seller in a taxable year has not yet exceeded P500,000.”
The withholding tax is the amount withheld by a business in payments of goods or services directly remitted to the government on behalf of suppliers or employees.
The BIR defines “gross remittances” as the total amount received by an e-marketplace operator or digital financial services provider from a buyer or consumer for the goods and services sold by or paid to the seller or merchant through the platform of the e-marketplace operator.
Let me end this piece by asking you readers: What is your reaction to this recent development? Do you think the 1% withholding tax on online sellers will help the BIR collect tens of billions of Pesos more by the end of this year?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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