BIR hopes to collect billions from online sellers

The Bureau of Internal Revenue (BIR) is expecting to collect billions of pesos in taxes from the growing e-marketplace industry after it subjected online sellers under the withholding tax system.

“Itong withholding tax on online transactions, dahil effective na ‘yan, inaasahan natin na malaki rin ang maitutulong nito,” BIR Commissioner Romeo Lumagui Jr. told reporters at the sidelines of the agency’s 120th anniversary celebration in Pasay City on Thursday.

(The withholding tax on online transactions, since this has been effective, we expect it could help immensely.)

Lumagui said the BIR cannot yet give an estimate how much it can collect from imposing withholding tax on online sellers.

“But, we're expecting that ‘yung revenues natin diyan would be in the billions,” he said.

The BIR’s plan to impose withholding tax to merchants in e-marketplaces took effect on July 15, 2024. 

Under its Revenue Regulation (RR) No. 16-2023, one-half of the gross remittances of e-marketplace operations and digital financial services providers to the sellers or merchants for goods or services paid through their platform shall be subject to a 1% creditable withholding tax.

The BIR, however, said the 1% withholding tax shall not be collected “if the annual total gross remittances to an online seller for the past taxable year has not exceeded P500,000” and “if the cumulative gross remittances to an online seller in a taxable year has not yet exceeded P500,000.”

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

The BIR defines “gross remittances” as the total amount received by an e-marketplace operator or digital financial services provider from a buyer or consumer for the goods and services sold by or paid to the seller or merchant through the platform of the e-marketplace operator.

The taxman had argued that with the proliferation of online sales transactions through the facilities of online platform providers, there was a need to take advantage of the opportunity to identify sellers of goods and services who are, therefore, obliged to declare their income resulting from these transactions for tax purposes.

Lumagui also expressed optimism that the BIR can hit its collection target next year of P3.2 trillion with the help of withholding taxes to be collected from online sellers.

However, he said that it would be difficult to change the mentality of online sellers.

“‘Yung mentality rin mga nasa mga online sellers na tingin nila dapat hindi sila mabuwisan… mga wala naman din silang pinagkaiba sa mga traditional na brick-and-mortar stores… kaya naman ang kinakailangan lang talaga dito is mas agresibong pangangampanya kung sino-sino ba talaga dapat ang mag-rehistro at magbayad ng buwis para naman pantay-pantay ang pagtrato natin,” Lumagui said.

“Ang daming nagsi-shift from traditional na mga purchases [papunta] doon sa mga online. So ang daming mga transactions na nagsi-shift diyan na hindi nakukuha ng BIR. That's why naka-focus tayo dyan na mabuwisan ‘yung mga nandyan sa online,” he added.

(The mentality of online sellers who believe they should not be taxed… is not different from traditional brick-and-mortar stores… that is why what is needed is an aggressive campaign on identifying who should register and pay taxes so everyone is treated equally.

Many have been shifting from traditional purchases towards online. So a lot of transactions that shifted are under the BIR’s radar. That’s why we are focused on taxing those who are doing business online.)—RF, GMA Integrated News