With the extension of the deadline over, the Bureau of Internal Revenue’s (BIR) withholding tax on online sellers who conduct business on electronic marketplaces (example: Lazada) came into effect recently, according to a Manila Bulletin business new report.
To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…
The Bureau of Internal Revenue (BIR) has started implementing the withholding tax requirement for online sellers who conduct business on electronic marketplaces like Lazada and Shopee.
In a statement, BIR Commissioner Romeo D. Lumagui Jr. said there will be no further extensions for online merchants to comply with the new withholding tax system outlined in Revenue Regulations (RR) No. 16-2023.
Under the BIR regulations, e-marketplace operators are mandated to withhold one percent creditable tax on half of the total payments sent to sellers or merchants for products or services sold through their platform.
“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 said.
Last April, the BIR extended the RR No. 16-2023 deadline until July 14, 2024.
“No more extensions will be given after the previous 90-day extension under [Revenue Memorandum Circular] RMC No. 55-2024,” the BIR noted.
The previous extension was given to allow e-marketplace operators to comply with the requirements of the BIR and adjust to the provisions of RR 16-2023 before the withholding tax is imposed.
Lumagui also clarified that withholding tax is not a new tax, noting it is a system where taxes are collected in advance and later offset against the seller’s total income tax liability.
“The BIR aims to level the playing field between brick-and-mortar stores, which are regularly complying with their tax obligations, and online marketplaces,” Lumagui said.
“Whether their business is operated online or through physical stores, sellers and merchants have to pay their taxes,” he added.
Meanwhile, the BIR has given digital financial services providers more time to switch to the new withholding tax system.
Let me end this piece by asking you readers: What is your reaction to this recent development? If you have been selling through the electronic marketplaces, do you think the 1% withholding tax will be a big challenge in the long-term? Have you prepared your business for the withholding tax?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
+++++
Thank you for reading. If you find this article engaging, please click the like button below, share this article to others and also please consider making a donation to support my publishing. If you are looking for a copywriter to create content for your special project or business, check out my services and my portfolio. Feel free to contact me with a private message. Also please feel free to visit my Facebook page Author Carlo Carrasco and follow me on Twitter at @HavenorFantasy as well as on Tumblr at https://carlocarrasco.tumblr.com/ and on Instagram athttps://www.instagram.com/authorcarlocarrasco
Author Carlo Carrasco 