BIR to impose withholding taxes on Online Sellers

The BIR finalized the transitory period of implementing Withholding Taxes to online sellers in the Philippines through its Revenue Memorandum Circular (RMC) No. 79–2024, issued on July 15, 2024.

Following the provisions of BIR RMC No. 8-2024, it was clarified that the transitory period would now be ninety (90) days. It should be noted that this would be the second extension towards imposing withholding tax on partner merchants. The first extension being made through BIR RMC No. 55-2024, which has since expired last July 14, 2024.

The previous extension was made following  BIR Revenue Regulation (RR) No. 16-2023 which was implemented to acknowledge the compliance by electronic marketplace operators and digital financial service providers to the relative policies or requirements of other government agencies. Additionally, it was also done to allow any affected party the chance to adjust and properly comply with the RR’s provisions before the actual imposition of the withholding tax.

The BIR Commissioner Romeo Lumagui then stated that:  

“No more extensions will be given after the previous 90-day extension under RMC No. 55-2024,”

He then provided further clarifications by stating:

“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.”.

The new transitory period allows for more time for digital financial services providers to fully complete their respective system adjustments to comply with the requirements of RR No. 16-2023 and other government agencies, thus transitory period is hereby extended for another ninety (90) days or until October 12, 2024.

BIR Commissioner Lumagui was quoted saying “Withholding Tax is not a new tax, it's merely a system of taxation where taxes are collected at source, which will be credited against the total income tax liability of the sellers/merchants.”.

“The BIR aims to level the playing field between brick-and-mortar stores, which are regularly complying with their tax obligations, and online marketplaces. Whether their business is operated online or through physical stores, sellers and merchants have to pay their taxes.” the BIR Commissioner commented.

Lastly, BIR RMC 79-2024 clarified that all electronic marketplace operators shall impose the withholding of tax to sellers/merchants starting July 15, 2024. It should also be noted that the extension was only for digital financial services providers.

Tax Services in the Philippines

Keeping up to date with the constant changes and amendments to tax laws can become quite tedious to manage. At Forvis Mazars, we work closely with clients – offering solutions that simplify their compliance and help them navigate complex tax situations with confidence, including helping bypass certain processes like online tax filing requirements.  

Our professionals have deep experience in multiple areas of tax, providing businesses at all stages of their life cycle with specialist advice. Our expertise ranges from corporate and employment tax, transfer pricing and corporate structuring, national and international transactions, and assessing tax implications when setting up new operations overseas, among others. 

Our solutions include outsourced tax compliance, tax advisory and expert opinions, application for incentives, and handling BIR tax assessments and audits, among others. 

For more information on Yu Villar Tadeja’s tax services in the Philippines, contact us for an initial call or follow the link below.