On 29 December 2023, the Philippine News Agency (PNA) published a release declaring that the Bureau of Internal Revenue (BIR) had imposed a 1% withholding tax on online merchants with earnings amounting to more than PHP 500,000 annually.
BIR Revenue Regulation 16-2023, issued last 21 December 2023, said the withholding tax would apply to one-half of the gross remittances by electronic marketplace operators and digital financial services providers to the sellers or merchants for the goods or services sold through their platform. This regulation came into effect on 5 January 2024.
The BIR defines an electronic marketplace as a digital service platform whose business is to connect online buyers/consumers with online sellers/merchants, facilitate and conclude the sales, process the payment of the products, goods, or services through such digital platform, or facilitate the shipment of goods or provide logistic services and post-purchase support within such platforms. These include marketplaces for online shopping, food delivery platforms, and platforms for accommodation booking.
However, sellers subject to a lower income tax rate pursuant to any existing law are also excluded. The regulations specified by the BIR will come into effect 15 days after they are published in the Official Gazette or in a widely circulated newspaper.
