BIR: Online Sellers’ Compliance to Withholding Tax Order ‘Positive’

The Bureau of Internal Revenue (BIR) reported positive compliance among online sellers regarding the implementation of the new withholding tax system, which began in July.

BIR Commissioner Romeo Lumagui Jr. said there has been a significant number of online sellers registering under the new system, which indicates that the initiative is progressing well.

Under Revenue Regulation No. 16-2023, effective July 15, 2024, e-marketplace operators and digital financial service providers must withhold 1% of gross remittances made to online sellers for goods or services. This applies if the seller’s annual gross remittances exceed P500,000.

The withholding tax system aims to ensure that online sellers properly declare their income for tax purposes, given the increasing volume of transactions conducted through digital platforms. The BIR did not disclose specific figures but noted that compliance has been substantial.