BIR: “It already took a long time to study the issues from its first exposition. So, the process could be shorter and we might just come up with it before the start of December.”
BIR – The Bureau of Internal Revenue is hoping to start collecting tax from operators of online marketplaces before December 2023.
This, as the tax agency seeks to cash-in on the exponential growth in e-commerce transactions during the COVID-19 pandemic.
Bureau of Internal Revenue (BIR) Assistant Commissioner Jethro Sabariaga said in an interview with reporters on the sidelines of a tax symposium hosted by SGV & Co. last week that the agency now studying the comments from stakeholders on the final draft of a new Revenue Regulation covering online sellers.
Once released, the new Revenue Regulation would amend the provisions of Sections 2.57.2 and 2.57.3 of Revenue Regulation No. 2-98 to impose a creditable withholding tax on income payments made by operators of electronic marketplaces to online merchants.
“It already took a long time to study the issues from its first exposition. So, the process could be shorter and we might just come up with it before the start of December,” Sabariaga said. “It will not be unreasonable to expect it before the start of December.”
Based on the draft Revenue Regulation released by tax agency last week, a 1% withholding tax would be slapped on one-half of the gross remittances by local operators of online marketplaces to their partner merchants for the services or goods sold through their facility. This would be on top of existing withholding tax obligations being imposed to operators of online marketplaces.
The new tax will not be imposed if the annual total gross remittances to an online merchant for the past taxable year has not exceeded PHP 250,000 and the fresh withholding tax will not be collected if the cumulative gross remittances to an online merchant in a taxable year has not yet exceeded PHP 250,000.
According to the tax agency, e-marketplaces (also referring to online marketplaces) are digital platforms whose business is to connect online shoppers with online merchants, as well as facilitate and conclude sales.
E-marketplaces includes food delivery platforms, marketplaces for online shopping, as well as online facility for booking of hotel, resort, inn, house, motel, condominium unit, room for rent, bed space, and other similar lodging accommodations.
Sabariaga also said that the tax agency is hoping to take advantage of increased consumption during the Christmas season.