On 15 April 2024, the Philippines Bureau of Internal Revenue (BIR) published the Revenue Memorandum Circular No. 55-2024 of 15 April 2024. The Circular offers an extension of the transition period for digital financial services providers and electronic marketplace operators. This extension facilitates the implementation of withholding tax on gross remittances to sellers or merchants.
This regulation was made in furtherance of the government’s effort to regulate and tax online transactions. Initially introduced by Revenue Regulations No. 16-2023, this 1% withholding tax requirement has been detailed in the BIR media release regarding the extension.
Revenue Memorandum Circular No. 55-2024 extended the transition period by adding another 90 days for compliance, or until July 14, 2024. The extension was made after considering the private sector’s request concerning implementing RR No. 16-2023.
The online transactions industry has experienced significant growth during and after the pandemic. However, it appears that many online sellers are not paying their share in taxes. This would be unfair to brick-and-mortar stores regularly complying with their tax obligations.
