MANILA – The Bureau of Internal Revenue has released a new revenue regulation to impose a 1 percent withholding tax on electronic marketplace operators and digital financial service providers in a bid to generate more funds.

Revenue Regulation No. 16-2023, signed by Finance Secretary Benjamin Diokno and BIR Commissioner Romeo Lumagui, states that the withholding tax would apply to one-half of gross remittances by e-marketplace operators and digital financial services providers to the sellers and merchants for the goods or services sold or paid through their platform or facility.

Lumagui earlier said the online platforms and payment channels would pay the said duty to the BIR.

“Si buyer, nagbabayad kay platform. Si platform ang magbabayad kay seller. So bago i-remit ni online platform kay seller kung magkano yung dapat niyang makuha, less yung commission niya, magwi-withhold siya ng 1 percent of one-half of the revenue,” Lumagui said in November.

He also said the revenue regulation contained provisions to shield small players from additional tax burden.

Under the measure, the 1 percent withholding tax is not applicable if the total annual gross remittances to an online merchant have not exceeded P500,000.

Those with cumulative gross remittances to an online seller that do not exceed P500,000, as well as sellers or merchants that are exempted from or subject to lower income tax rates, are also excluded.

The tax agency is also pushing for the registration of online sellers to the BIR to formally identify the scope of the e-commerce industry in the country.

Finance Secretary Benjamin Diokno said the measure would promote fairness in the overall tax system.

The BIR said the 1 percent withholding tax would take effect 15 days after the publication of the revenue regulation in the Official Gazette or a newspaper of general circulation.

• BIR eyes collecting 1 pct withholding tax from online sellers as early as December

- With reports from Jessica Fenol, ABS-CBN News