The Bureau of Internal Revenue will impose a one percent withholding tax on online sellers and merchants as part of the government’s effort to raise more revenues.
However, the withholding tax imposed shall not apply if the annual total gross remittances to an online seller or merchant for the past taxable year did not exceed P500,000.
Under BIR Revenue Regulation No. 16-2023 signed by Finance Secretary Benjamin Diokno and BIR Commissioner Romeo Lumagui, the withholding tax will be calculated based on one-half of the gross remittances by e-marketplace operators and digital financial service providers to the seller or merchants for the goods or services sold or paid through their platform or facility.
Electronic marketplace refers to a digital service platform whose business is to connect online buyers with online sellers or merchants, while digital financial services platforms refer to the financial technology offering a wide array of services through internet, mobile application or other similar means, including banking services and insurance.
The Philippine E-Commerce Association of the Philippines (PECA) earlier said there are about eight million online sellers in the Philippines.
Based on the data of the Department of Trade and Industry, the sector’s monthly sales range between P2 billion to P3 billion.
The Philippine Statistics Authority (PSA) likewise reported the country’s digital economy in 2022 amounted to P2.08 trillion, contributing 9.4 percent to the economy. This amount represents an increase of 11 percent from P1.87 trillion in 2021.
According to PSA, the digital economy is composed of digital transactions covering digital-enabling infrastructure, e-commerce, and digital media or content.
E-commerce, which accounted for 20 percent of the total digital economy in 2022, grew by 26.5 percent from its previous year’s record of P328.84 billion.
Of the total amount of digital transactions in 2022, digital-enabling infrastructure made up the largest share amounting to P1.60 trillion or 77.2 percent.
The estimated number of employed persons in the digital economy was 6.05 million in 2022. This count was 8.2 percent higher than the 5.59 million persons employed in the digital economy in 2021.