RR No. 16-2023: Further amends the provisions of Revenue Regulations No. 2-98, as amended, to impose Withholding Tax on gross remittances made by electronic marketplace operators and digital financial services providers to sellers/merchants

Key points

1. Rate and base. The creditable withholding tax is One percent (1%) on one-half (1/2) of the gross remittances to sellers or merchants for goods or services sold or paid through the platform or facility.
2. When it does not apply. It does not apply if the seller’s annual gross remittances for the past taxable year did not exceed ₱500,000.00, or if cumulative remittances in the taxable year have not yet exceeded ₱500,000.00. It also does not apply to sellers duly exempt or subject to a lower income tax rate under a law or treaty who submit proof of entitlement.
3. Meaning of gross remittance. It is the total amount the operator or provider receives from the buyer for goods and services sold through the platform. It excludes sales returns and discounts, separately billed delivery or shipping fees, VAT collected and remitted to the seller, and consideration for using the platform.
4. Covered platforms and payments. E-marketplaces include online shopping, food delivery and lodging booking platforms, and similar marketplaces. Payment by platform e-wallet, another provider’s e-wallet, or cash collected for the operator is covered, and the last facility that controls payment withholds.
5. Digital financial services providers. The tax covers remittances through e-wallet and similar modes for purchases from physical stores or a seller’s website or app. If the issuer and acquirer differ, only the acquirer’s remittance to the seller is taxed.
6. Registration and account name. Online sellers register with the BIR on or before starting business on an e-marketplace under Section 236 of the NIRC. Operators require the Certificate of Registration (BIR Form No. 2303), and the seller’s account must be under its BIR-registered tradename.

Who is affected

• E-marketplace operators
• Digital financial services providers
• Local online sellers and merchants