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Diokno: Collecting withholding tax from online sellers ‘a matter of fairness’

Finance Secretary Benjamin Diokno defended the Bureau of Internal Revenue's (BIR) plan  to collect a creditable withholding tax of 1% from partner-merchants of online platforms, saying this would make the tax system "fair."

“It’s not only increasing tax revenues, it's a matter of fairness. A good tax system should be fair. That should be one of the characteristics of a good tax system, fairness,” Diokno told reporters at his weekly press chat.

“Kung bibili ka sa regular store, babayad ka ng tax. Sa online, di ka babayad ng tax, unfair 'yun. To me, it's more like fairness. People have to perceive that the tax system is fair, so they’re willing to pay,” he added.

Early this year, the BIR proposed to impose a creditable withholding tax of 1% on one-half of the gross remittances of online platform providers to their partner sellers or merchants.

The taxman taxman had defended the proposal saying it is not a new tax and its collection is within existing laws.

“The proposal is a creditable withholding tax. So it’s not really a new tax. It’s just a mode of collecting,” BIR Commissioner Romeo Lumagui Jr. said in May.

Last week, Lumagui said that the collection of the 1% withholding tax from online merchants may start in the fourth quarter of this year. 

The withholding tax is the amount withheld by a business in payments of goods or services which is directly remitted to the government on behalf of suppliers or employees.

“Sa tax on online sellers, fairness ‘yun. Sino ba nakaka-afford ng ganung transaction? It’s a matter of fairness,” Diokno said.

The United Filipino Consumers and Commuters (UFCC) earlier urged the BIR to reconsider its plan, describing it as a “heavy blow” to “ordinary Filipino people who will suffer the effects of the new tax." — BM, GMA Integrated News